Limited Brands (LTD) PriceWatch Alert Up To 18.87% Return

Posted on Monday, September 08, 2008 8:07 AM

Limited Brands (NYSE: LTD) ended the last trading session at $20.69. So far the stock has hit a 52-week low of $14.41 and 52-week high of $24.24. Limited Brands stock has been showing support around 19.62 and resistance in the 21.30 range. Technical indicators for the stock are Bullish 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 Jan '09 17.50 covered call (LTD AW) for a net debit in the $16.39 area. That is also the break even stock price for this trade. This covered call has a 131 day duration, provides 20.78% downside protection and a 6.77% assigned return rate for an 18.87% 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 '10 5 Call (WDL AA) and selling the Jan '09 17.50 call (LTD AW) for an $11.40 debit. The trade has a 131 day life and would provide 20.73% downside protection and a 9.65% assigned return rate for a 27.00% annualized return rate (for comparison purposes only). Limited Brands has a current annual dividend yield of 2.84%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]