Wyeth (WYE) 10/16/09 PriceWatch Alert Support Down To $49.78

Posted: Friday, October 16, 2009 8:44 AM EDT
By: Market Intelligence Center Staff

Wyeth (NYSE: WYE) closed yesterday at $50.39. So far the stock has hit a 52-week low of $29.08 and 52-week high of $50.45. Wyeth stock has been showing support around 49.78 and resistance in the 50.76 range. Technical indicators for the stock are Bullish and S&P gives WYE a neutral 3 STAR (out of 5) hold rating. WYE appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Apr '10 50 covered call (WYE DJ) for a net debit in the $48.99 area. That is also the break even stock price for this trade. This covered call has an 183 day duration, provides 2.78% downside protection and a 2.06% assigned return rate for a 4.11% 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 WYE Jan '11 45 Call (VAH AI) and selling the Apr '10 50 call (WYE DJ) for a $4.45 debit. The trade has an 183 day life and would provide 1.87% downside protection and a 12.36% assigned return rate for a 25.00% annualized return rate (for comparison purposes only). Wyeth has a current annual dividend yield of 2.44%. [FBB-Seven Summits Research]