CIT Group (CIT) 3/17/10 PriceWatch Alert With 8.40% Downside Protection

Posted: Wednesday, March 17, 2010 8:04 AM EDT
By: Market Intelligence Center Staff

CIT Group (NYSE: CIT) closed yesterday at $36.29. So far the stock has hit a 52-week low of $24.83 and 52-week high of $37.88. CIT Group stock has been showing support around 34.94 and resistance in the 38.56 range. Technical indicators for the stock are Bullish. CIT appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jul '10 36 covered call for a net debit in the $33.24 area. That is also the break even stock price for this trade. This covered call has a 122 day duration, provides 8.40% downside protection and an 8.30% assigned return rate for a 24.84% 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 CIT Jan '11 22.50 Call and selling the Jul '10 36 call for an $11.95 debit. The trade has a 122 day life and would provide 5.07% downside protection and a 12.97% assigned return rate for a 39.00% annualized return rate (for comparison purposes only). CIT Group does not pay dividends at this time. [WBA-Seven Summits Research]