News Corp (NWS) PriceWatch Alert Up To 10.62% Downside Protection

Posted on Wednesday, July 02, 2008 8:07 AM

News Corp (NYSE: NWS) closed yesterday at $15.06. So far the stock has hit a 52-week low of $14.78 and 52-week high of $24.95. News Corp stock has been showing support around 14.40 and resistance in the 15.82 range. Technical indicators for the stock are Bearish and S&P gives NWS a positive 4 STAR (out of 5) buy rating. NWS appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jan '09 15 covered call (NWS AC) for a net debit in the $13.46 area. That is also the break even stock price for this trade. This covered call has a 199 day duration, provides 10.62% downside protection and an 11.44% assigned return rate for a 20.99% 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 NWS Jan '09 10 Call (NWS AB) and selling the Jan '09 15 call (NWS AC) for a $3.75 debit. The trade has a 199 day life and would provide 8.70% downside protection and a 33.33% assigned return rate for a 61.00% annualized return rate (for comparison purposes only). News Corp has a current annual dividend yield of 0.73%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]