Nordstrom (JWN) PriceWatch Alert With Support Around $26.53

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

Nordstrom (NYSE: JWN) closed yesterday at $29.24. So far the stock has hit a 52-week low of $25.67 and 52-week high of $53.47. Nordstrom stock has been showing support around 26.53 and resistance in the 30.61 range. Technical indicators for the stock are Bearish and S&P gives JWN a neutral 3 STAR (out of 5) hold rating. JWN appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Sep '08 25 covered call (JWN IE) for a net debit in the $24.04 area. That is also the break even stock price for this trade. This covered call has a 59 day duration, provides 17.78% downside protection and a 3.99% assigned return rate for a 24.70% 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 JWN Jan '09 15 Call (JWN AC) and selling the Sep '08 25 call (JWN IE) for a $9.35 debit. The trade has a 59 day life and would provide 16.72% downside protection and a 6.95% assigned return rate for a 43.00% annualized return rate (for comparison purposes only). Nordstrom 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]