FPL Group (FPL) 3/15/10 PriceWatch Alert With $44.07 Break Even

Posted: Monday, March 15, 2010 8:13 AM EDT
By: Market Intelligence Center Staff

FPL Group (NYSE: FPL) ended the last trading session at $47.07. So far the stock has hit a 52-week low of $44.82 and 52-week high of $60.61. FPL Group stock has been showing support around 46.56 and resistance in the 47.86 range. Technical indicators for the stock are Bearish and S&P gives FPL a neutral 3 STAR (out of 5) hold rating. FPL appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jun '10 45 covered call for a net debit in the $44.07 area. That is also the break even stock price for this trade. This covered call has a 96 day duration, provides 6.37% downside protection and a 2.11% assigned return rate for an 8.02% 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 FPL Jan '11 35 Call and selling the Jun '10 45 call for a $9.55 debit. The trade has a 96 day life and would provide 5.35% downside protection and a 4.71% assigned return rate for an 18.00% annualized return rate (for comparison purposes only). FPL Group has a current annual dividend yield of 4.26%. [ABR-Seven Summits Research]