Prudential Financial (PRU) PriceWatch Alert Up To 11.68% Downside Protection

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

Prudential Financial (NYSE: PRU) ended the last trading session at $78.74. So far the stock has hit a 52-week low of $54.70 and 52-week high of $101.45. Prudential Financial stock has been showing support around 73.78 and resistance in the 81.22 range. Technical indicators for the stock are Bullish and S&P gives PRU a positive 4 STAR (out of 5) buy rating. PRU appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Dec '08 75 covered call (PRU LO) for a net debit in the $69.54 area. That is also the break even stock price for this trade. This covered call has a 103 day duration, provides 11.68% downside protection and a 7.85% assigned return rate for a 27.82% 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 PRU Jan '10 30 Call (YKY AU) and selling the Dec '08 75 call (PRU LO) for a $40.00 debit. The trade has a 103 day life and would provide 11.10% downside protection and a 12.50% assigned return rate for a 44.00% annualized return rate (for comparison purposes only). Prudential Financial has a current annual dividend yield of 1.49%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]