Exelon (EXC) 10/15/09 PriceWatch Alert With $47.46 Break Even

Posted: Thursday, October 15, 2009 8:39 AM EDT
By: Market Intelligence Center Staff

Exelon (NYSE: EXC) closed yesterday at $49.46. So far the stock has hit a 52-week low of $38.41 and 52-week high of $58.98. Exelon stock has been showing support around 48.51 and resistance in the 50.67 range. Technical indicators for the stock are Bearish and S&P gives EXC a positive 4 STAR (out of 5) buy rating. EXC appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jan '10 50 covered call (EXC AJ) for a net debit in the $47.46 area. That is also the break even stock price for this trade. This covered call has a 93 day duration, provides 4.04% downside protection and a 5.35% assigned return rate for a 21.00% 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 EXC Jan '11 30 Call (VFR AF) and selling the Jan '10 50 call (EXC AJ) for a $17.70 debit. The trade has a 93 day life and would provide 3.56% downside protection and a 12.99% assigned return rate for a 51.00% annualized return rate (for comparison purposes only). Exelon has a current annual dividend yield of 4.23%. [THA-Seven Summits Research]