Whole Foods Market (WFMI) PriceWatch Alert Technicals Showing Bullish

Posted: Thursday, June 04, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

Whole Foods Market (NasdaqNM: WFMI) closed yesterday at $20.64. So far the stock has hit a 52-week low of $7.04 and 52-week high of $29.82. Whole Foods Market stock has been showing support around 19.89 and resistance in the 21.21 range. Technical indicators for the stock are Bullish and S&P gives WFMI a weak 2 STAR (out of 5) sell rating. WFMI appears on the Investors Observer Stocks In The News list. RBC Capital Markets upgraded WFMI Monday to Outperform from Sector Perform. For a hedged play on this stock, look at a Nov '09 17 covered call (FMQ KF) for a net debit in the $15.64 area. That is also the break even stock price for this trade. This covered call has a 170 day duration, provides 24.22% downside protection and an 8.70% assigned return rate for an 18.67% 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 WFMI Jan '10 12.50 Call (YDU AV) and selling the Nov '09 17 call (FMQ KF) for a $3.60 debit. The trade has a 170 day life and would provide 22.00% downside protection and a 25.00% assigned return rate for a 54.00% annualized return rate (for comparison purposes only). Whole Foods Market 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]