Goodyear Tire and Rubber (GT) PriceWatch Alert for May 28, 2009

Posted: Thursday, May 28, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

Goodyear Tire and Rubber (NYSE: GT) closed yesterday at $11.06. So far the stock has hit a 52-week low of $3.17 and 52-week high of $25.51. Goodyear stock has been showing support around 9.97 and resistance in the 12.85 range. Technical indicators for the stock are Bullish and S&P gives GT a neutral 3 STAR (out of 5) hold rating. GT appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '10 7.50 covered call (GT AU) for a net debit in the $6.56 area. That is also the break even stock price for this trade. This covered call has a 233 day duration, provides 40.69% downside protection and a 14.33% assigned return rate for a 22.45% 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 GT Jan '10 5 Call (GT AA) and selling the Jan '10 7.50 call (GT AU) for a $2.10 debit. The trade has a 233 day life and would provide 35.80% downside protection and a 19.05% assigned return rate for a 30.00% annualized return rate (for comparison purposes only). Goodyear 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]