General Electric (GE) PriceWatch Alert Shows Bearish Technicals

Posted on Wednesday, July 23, 2008 8:07 AM

General Electric (NYSE: GE) closed yesterday at $28.50. So far the stock has hit a 52-week low of $25.60 and 52-week high of $42.15. General Electric stock has been showing support around 27.28 and resistance in the 29.14 range. Technical indicators for the stock are Bearish and S&P gives GE a positive 4 STAR (out of 5) buy rating. GE appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Dec '08 29 covered call (GEW LC) for a net debit in the $26.93 area. That is also the break even stock price for this trade. This covered call has a 150 day duration, provides 5.51% downside protection and a 7.69% assigned return rate for an 18.70% 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 GE Jan '09 27 Call (GEW AQ) and selling the Dec '08 29 call (GEW LC) for a $1.14 debit. The trade has a 150 day life and would provide 1.26% downside protection and a 75.44% assigned return rate for an 184.00% annualized return rate (for comparison purposes only). General Electric 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]