Prudential Financial (PRU) PriceWatch Alert Down To $28.04 Break Even

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

Prudential Financial (NYSE: PRU) closed yesterday at $34.94. So far the stock has hit a 52-week low of $10.63 and 52-week high of $89.82. Prudential Financial stock has been showing support around 33.43 and resistance in the 37.95 range. Technical indicators for the stock are Bearish and S&P gives PRU a positive 4 STAR (out of 5) buy rating. PRU appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Sep '09 30 covered call (PRU IR) for a net debit in the $28.04 area. That is also the break even stock price for this trade. This covered call has a 75 day duration, provides 19.75% downside protection and a 6.99% assigned return rate for a 34.02% 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 PRU Jan '11 5 Call (OYK AA) and selling the Sep '09 30 call (PRU IR) for a $23.25 debit. The trade has a 75 day life and would provide 19.15% downside protection and a 7.53% assigned return rate for a 37.00% annualized return rate (for comparison purposes only). Prudential Financial has a current annual dividend yield of 1.54%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]