Limited Brands (LTD) PriceWatch Alert Technicals Showing Neutral

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

Limited Brands (NYSE: LTD) closed yesterday at $16.90. So far the stock has hit a 52-week low of $14.41 and 52-week high of $26.89. Limited Brands stock has been showing support around 15.55 and resistance in the 17.57 range. Technical indicators for the stock are Neutral and S&P gives LTD a neutral 3 STAR (out of 5) hold rating. LTD appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Nov '08 15 covered call (LTD KC) for a net debit in the $14.00 area. That is also the break even stock price for this trade. This covered call has a 122 day duration, provides 17.16% downside protection and a 7.14% assigned return rate for a 21.37% 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 LTD Jan '09 10 Call (LTD AB) and selling the Nov '08 15 call (LTD KC) for a $4.25 debit. The trade has a 122 day life and would provide 15.68% downside protection and a 17.65% assigned return rate for a 53.00% annualized return rate (for comparison purposes only). Limited Brands 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]