L3 Communications (LLL) NewsBite

Posted on Monday, June 23, 2008 9:04 AM

L3 Communications (NYSE: LLL) ended the last trading session at $94.82. So far the stock has hit a 52-week low of $90.11 and 52-week high of $115.33. L3 Communications stock has been showing support around 93.53 and resistance in the 97.09 range. Technical indicators for the stock are Bearish and S&P gives LLL a positive 4 STAR (out of 5) buy rating. For a hedged play on this stock, look at an Oct '08 95 covered call (LLL JS) for a net debit in the $89.42 area. That is also the break even stock price for this trade. This covered call has an 117 day duration, provides 5.70% downside protection and a 6.24% assigned return rate for a 19.47% 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 LLL Jan '09 80 Call (LLL AP) and selling the Oct '08 95 call (LLL JS) for a $12.45 debit. The trade has an 117 day life and would provide 2.50% downside protection and a 20.48% assigned return rate for a 64.00% annualized return rate (for comparison purposes only). L3 Communications has a current annual dividend yield of 1.20%. [IHF - Investors Observer]