Hartford Financial (HIG) PriceWatch Alert Could Hit 20.90% Return

Posted: Monday, June 08, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

Hartford Financial (NYSE: HIG) ended the last trading session at $14.90. 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 14.16 and resistance in the 15.82 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 9 covered call (HIG LD) for a net debit in the $8.10 area. That is also the break even stock price for this trade. This covered call has a 194 day duration, provides 45.64% downside protection and an 11.11% assigned return rate for a 20.90% 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 9 call (HIG LD) for a $3.50 debit. The trade has a 194 day life and would provide 42.95% downside protection and a 14.29% assigned return rate for a 27.00% annualized return rate (for comparison purposes only). Hartford Financial has a current annual dividend yield of 1.34%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]