Goldman Sachs (GS) PriceWatch Alert Targets 6.85% Downside Protection

Posted: Monday, June 29, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

Goldman Sachs (NYSE: GS) ended the last trading session at $146.74. So far the stock has hit a 52-week low of $47.41 and 52-week high of $190.04. Goldman Sachs stock has been showing support around 142.03 and resistance in the 150.55 range. Technical indicators for the stock are Bullish and S&P gives GS a neutral 3 STAR (out of 5) hold rating. GS appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at an Aug '09 145 covered call (GS HI) for a net debit in the $136.69 area. That is also the break even stock price for this trade. This covered call has a 54 day duration, provides 6.85% downside protection and a 6.08% assigned return rate for a 41.09% 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 GS Jan '11 50 Call (XYF AJ) and selling the Aug '09 145 call (GS HI) for an $88.35 debit. The trade has a 54 day life and would provide 5.72% downside protection and a 7.53% assigned return rate for a 51.00% annualized return rate (for comparison purposes only). Goldman Sachs has a current annual dividend yield of 0.98%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]