Time Warner (TWX) PriceWatch Alert for September 8, 2008

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

Time Warner (NYSE: TWX) ended the last trading session at $15.25. So far the stock has hit a 52-week low of $13.50 and 52-week high of $19.20. Time Warner stock has been showing support around 14.83 and resistance in the 15.69 range. Technical indicators for the stock are Bearish and S&P gives TWX a neutral 3 STAR (out of 5) hold rating. TWX appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at an Apr '09 15 covered call (TWX DC) for a net debit in the $13.45 area. That is also the break even stock price for this trade. This covered call has a 222 day duration, provides 11.80% downside protection and an 11.52% assigned return rate for an 18.95% 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 TWX Jan '10 10 Call (WAN AB) and selling the Apr '09 15 call (TWX DC) for a $4.00 debit. The trade has a 222 day life and would provide 8.20% downside protection and a 25.00% assigned return rate for a 41.00% annualized return rate (for comparison purposes only). Time Warner has a current annual dividend yield of 1.50%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]