J Crew (JCG) 3/10/10 PriceWatch Alert At $41.99 Break Even

Posted: Wednesday, March 10, 2010 8:08 AM EDT
By: Market Intelligence Center Staff

J Crew (NYSE: JCG) closed yesterday at $46.99. So far the stock has hit a 52-week low of $9.53 and 52-week high of $47.67. J Crew stock has been showing support around 46.20 and resistance in the 47.96 range. Technical indicators for the stock are Bullish and S&P gives JCG a neutral 3 STAR (out of 5) hold rating. JCG appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Sep '10 47.50 covered call for a net debit in the $41.99 area. That is also the break even stock price for this trade. This covered call has a 192 day duration, provides 10.64% downside protection and a 13.12% assigned return rate for a 24.95% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the JCG Jan '11 35 Call and selling the Sep '10 47.50 call for a $9.75 debit. The trade has a 192 day life and would provide 4.77% downside protection and a 28.21% assigned return rate for a 54.00% annualized return rate (for comparison purposes only). J Crew does not pay dividends at this time. [WBA-Seven Summits Research]