Hartford Financial (HIG) PriceWatch Alert Could Hit 22.74% Return

Posted: Wednesday, May 27, 2009 8:07 AM EDT

Hartford Financial (NYSE: HIG) ended the last trading session at $14.79. So far the stock has hit a 52-week low of $3.33 and 52-week high of $73.89. Hartford Financial stock has been showing support around 13.81 and resistance in the 15.59 range. Technical indicators for the stock are Bullish and S&P gives HIG a neutral 3 STAR (out of 5) hold rating. HIG appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Dec '09 8 covered call (HIG LO) for a net debit in the $7.09 area. That is also the break even stock price for this trade. This covered call has a 206 day duration, provides 52.06% downside protection and a 12.83% assigned return rate for a 22.74% 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 HIG Jan '10 5 Call (YAP AA) and selling the Dec '09 8 call (HIG LO) for a $2.55 debit. The trade has a 206 day life and would provide 48.95% downside protection and a 17.65% assigned return rate for a 31.00% annualized return rate (for comparison purposes only). Hartford Financial has a current annual dividend yield of 1.27%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]

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