Target (TGT) PriceWatch Alert for September 5, 2008
Posted on Friday, September 05, 2008 8:07 AM
Target (NYSE: TGT) closed yesterday at $53.83. So far the stock has hit a 52-week low of $42.32 and 52-week high of $68.50. Target stock has been showing support around 52.34 and resistance in the 56.58 range. Technical indicators for the stock are Bullish and S&P gives TGT a neutral 3 STAR (out of 5) hold rating. TGT appears on the Investors Observer Stocks In The News list. TGT dropped $1.18 (-2.15%) Thursday after announcing its August sales at stores open at least one year fell 2.1%. Analysts, on average, had expected same-store sales to fall 2.6%. For a hedged play on this stock, look at a Jan '09 52.50 covered call (TGT AX) for a net debit in the $47.88 area. That is also the break even stock price for this trade. This covered call has a 134 day duration, provides 11.05% downside protection and a 9.65% assigned return rate for a 26.28% 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 TGT Jan '10 25 Call (WDH AE) and selling the Jan '09 52.50 call (TGT AX) for a $24.40 debit. The trade has a 134 day life and would provide 8.23% downside protection and a 12.70% assigned return rate for a 35.00% annualized return rate (for comparison purposes only). Target has a current annual dividend yield of 1.21%. [For more information on these strategies along with more details on possible risks go to
www.iotogo.com/HPWAinfo]