Target (TGT) PriceWatch Alert With $34.40 Break Even

Posted: Monday, July 06, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

Target (NYSE: TGT) closed yesterday at $37.45. So far the stock has hit a 52-week low of $25.00 and 52-week high of $59.55. Target stock has been showing support around 36.46 and resistance in the 38.76 range. Technical indicators for the stock are Bearish and S&P gives TGT a positive 4 STAR (out of 5) buy rating. TGT appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at an Oct '09 37.50 covered call (TGT JT) for a net debit in the $34.40 area. That is also the break even stock price for this trade. This covered call has a 103 day duration, provides 8.14% downside protection and a 9.01% assigned return rate for a 31.93% 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 TGT Jan '11 15 Call (VDH AC) and selling the Oct '09 37.50 call (TGT JT) for a $19.65 debit. The trade has a 103 day life and would provide 7.48% downside protection and a 14.50% assigned return rate for a 51.00% annualized return rate (for comparison purposes only). Target has a current annual dividend yield of 1.61%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]