Nordstrom (JWN) PriceWatch Alert At $14.13 Break Even

Posted: Monday, July 06, 2009 8:07 AM EDT

Nordstrom (NYSE: JWN) closed yesterday at $18.63. So far the stock has hit a 52-week low of $6.61 and 52-week high of $37.00. Nordstrom stock has been showing support around 17.88 and resistance in the 20.14 range. Technical indicators for the stock are Bearish and S&P gives JWN a neutral 3 STAR (out of 5) hold rating. JWN appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at an Oct '09 15 covered call (JWN JC) for a net debit in the $14.13 area. That is also the break even stock price for this trade. This covered call has a 103 day duration, provides 24.15% downside protection and a 6.16% assigned return rate for a 21.82% 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 JWN Jan '11 5 Call (VNZ AA) and selling the Oct '09 15 call (JWN JC) for a $9.40 debit. The trade has a 103 day life and would provide 22.71% downside protection and a 6.38% assigned return rate for a 23.00% annualized return rate (for comparison purposes only). Nordstrom has a current annual dividend yield of 3.26%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]

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