Lennar (LEN) PriceWatch Alert for October 26, 2009

Posted: Monday, October 26, 2009 8:31 AM EDT

Lennar (NYSE: LEN) ended the last trading session at $14.13. So far the stock has hit a 52-week low of $3.42 and 52-week high of $17.66. Lennar stock has been showing support around 13.12 and resistance in the 15.70 range. Technical indicators for the stock are Neutral and S&P gives LEN a very positive 5 STAR (out of 5) strong buy rating. LEN appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a May '10 12 covered call (LEN EL) for a net debit in the $10.63 area. That is also the break even stock price for this trade. This covered call has a 208 day duration, provides 24.77% downside protection and a 12.89% assigned return rate for a 22.62% 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 LEN Jan '11 5 Call (OOW AA) and selling the May '10 12 call (LEN EL) for a $6.10 debit. The trade has a 208 day life and would provide 21.44% downside protection and a 14.75% assigned return rate for a 26.00% annualized return rate (for comparison purposes only). Lennar has a current annual dividend yield of 1.17%. [ABR-Seven Summits Research]

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