Emerson Electric (EMR) Appearing On Investors Observer Volume Leaders List

Posted: Monday, March 22, 2010 9:17 AM EDT
By: Market Intelligence Center Staff

Emerson Electric (NYSE: EMR) ended the last trading session at $48.62. So far the stock has hit a 52-week low of $26.71 and 52-week high of $49.28. Emerson Electric stock has been showing support around 47.87 and resistance in the 49.65 range. Technical indicators for the stock are Bullish and S&P gives EMR a neutral 3 STAR (out of 5) hold rating. EMR appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jun '10 50 covered call for a net debit in the $47.32 area. That is also the break even stock price for this trade. This covered call has an 89 day duration, provides 2.67% downside protection and a 5.66% assigned return rate for a 23.23% 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 EMR Jan '11 40 Call and selling the Jun '10 50 call for an $8.30 debit. The trade has an 89 day life and would provide 0.66% downside protection and a 20.48% assigned return rate for an 84.00% annualized return rate (for comparison purposes only). Emerson Electric has a current annual dividend yield of 2.74%. [ABR-Seven Summits Research]