General Electric (GE) PriceWatch Alert for August 21, 2008

Posted on Thursday, August 21, 2008 8:07 AM

General Electric (NYSE: GE) closed yesterday at $28.65. 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 27.72 and resistance in the 29.40 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 $27.05 area. That is also the break even stock price for this trade. This covered call has a 121 day duration, provides 5.58% downside protection and a 7.21% assigned return rate for a 21.75% 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 '10 20 Call (WGE AD) and selling the Dec '08 29 call (GEW LC) for a $7.65 debit. The trade has a 121 day life and would provide 3.49% downside protection and a 17.65% assigned return rate for a 53.00% annualized return rate (for comparison purposes only). General Electric has a current annual dividend yield of 4.16%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]