FPL Group (FPL) 3/19/10 PriceWatch Alert Up To 4.67% Return

Posted: Friday, March 19, 2010 8:07 AM EDT
By: Market Intelligence Center Staff

FPL Group (NYSE: FPL) closed yesterday at $47.97. So far the stock has hit a 52-week low of $45.29 and 52-week high of $60.61. FPL Group stock has been showing support around 47.59 and resistance in the 48.37 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 Sep '10 45 covered call for a net debit in the $43.97 area. That is also the break even stock price for this trade. This covered call has an 183 day duration, provides 8.34% downside protection and a 2.34% assigned return rate for a 4.67% 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 Sep '10 45 call for a $9.25 debit. The trade has an 183 day life and would provide 7.75% downside protection and an 8.11% assigned return rate for a 16.00% annualized return rate (for comparison purposes only). FPL Group has a current annual dividend yield of 4.18%. [FBB-Seven Summits Research]