Walmart Stores (WMT) PriceWatch Alert Up To 10.18% Return

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

Walmart Stores (NYSE: WMT) closed yesterday at $47.79. So far the stock has hit a 52-week low of $46.25 and 52-week high of $63.85. Walmart Stores stock has been showing support around 47.34 and resistance in the 48.62 range. Technical indicators for the stock are Bearish and S&P gives WMT a very positive 5 STAR (out of 5) strong buy rating. WMT appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jan '10 45 covered call (WWT AI) for a net debit in the $42.69 area. That is also the break even stock price for this trade. This covered call has a 194 day duration, provides 10.67% downside protection and a 5.41% assigned return rate for a 10.18% 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 WMT Jan '11 30 Call (VWT AF) and selling the Jan '10 45 call (WWT AI) for a $13.25 debit. The trade has a 194 day life and would provide 9.50% downside protection and a 13.21% assigned return rate for a 25.00% annualized return rate (for comparison purposes only). Walmart Stores has a current annual dividend yield of 2.24%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]