Verizon Communications (VZ) PriceWatch Alert Down To $27.63 Break Even

Posted: Wednesday, December 03, 2008 8:07 AM EDT
By: Market Intelligence Center Staff

Verizon Communications (NYSE: VZ) closed yesterday at $32.13. So far the stock has hit a 52-week low of $23.07 and 52-week high of $45.70. Verizon Communications stock has been showing support around 30.25 and resistance in the 33.33 range. Technical indicators for the stock are Bullish and S&P gives VZ a positive 4 STAR (out of 5) buy rating. VZ appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jul '09 32.50 covered call (VZ GZ) for a net debit in the $27.63 area. That is also the break even stock price for this trade. This covered call has a 227 day duration, provides 14.01% downside protection and a 17.63% assigned return rate for a 28.34% 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 VZ Jan '10 20 Call (WLE AD) and selling the Jul '09 32.50 call (VZ GZ) for an $8.65 debit. The trade has a 227 day life and would provide 10.83% downside protection and a 44.51% assigned return rate for a 72.00% annualized return rate (for comparison purposes only). Verizon Communications has a current annual dividend yield of 5.64%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]