Walt Disney (DIS) PriceWatch Alert Down To $29.15 Break Even

Posted on Friday, July 18, 2008 8:07 AM

Walt Disney (NYSE: DIS) closed yesterday at $31.20. So far the stock has hit a 52-week low of $26.30 and 52-week high of $35.69. Walt Disney stock has been showing support around 29.74 and resistance in the 31.96 range. Technical indicators for the stock are Neutral and S&P gives DIS a very positive 5 STAR (out of 5) strong buy rating. DIS appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jan '09 32.50 covered call (DIS AZ) for a net debit in the $29.15 area. That is also the break even stock price for this trade. This covered call has an 183 day duration, provides 6.57% downside protection and an 11.49% assigned return rate for a 22.92% 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 DIS Jan '09 30 Call (DIS AF) and selling the Jan '09 32.50 call (DIS AZ) for a $1.40 debit. The trade has an 183 day life and would provide no downside protection and a 78.57% assigned return rate for a 157.00% annualized return rate (for comparison purposes only). Walt Disney does not pay dividends at this time. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]