Pulte Homes Inc. (PHM) PriceWatch Alert Targets 22.51% Return

Posted: Thursday, April 30, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

Pulte Homes Inc. (NYSE: PHM) closed yesterday at $11.86. So far the stock has hit a 52-week low of $6.49 and 52-week high of $17.32. Pulte Homes stock has been showing support around 11.15 and resistance in the 12.55 range. Technical indicators for the stock are Bullish and S&P gives PHM a positive 4 STAR (out of 5) buy rating. PHM appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '10 7.50 covered call (YHI AS) for a net debit in the $6.46 area. That is also the break even stock price for this trade. This covered call has a 261 day duration, provides 45.53% downside protection and a 16.10% assigned return rate for a 22.51% 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 PHM Jan '10 2.50 Call (YHI AZ) and selling the Jan '10 7.50 call (YHI AS) for a $4.10 debit. The trade has a 261 day life and would provide 44.35% downside protection and a 21.95% assigned return rate for a 31.00% annualized return rate (for comparison purposes only). Pulte Homes does not pay dividends at this time. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]