Discover Financial Services (DFS) 10/30/09 PriceWatch Alert With $11.65 Break Even

Posted: Friday, October 30, 2009 8:07 AM EDT

Discover Financial Services (NYSE: DFS) closed yesterday at $14.95. So far the stock has hit a 52-week low of $4.73 and 52-week high of $17.36. Discover stock has been showing support around 14.16 and resistance in the 15.34 range. Technical indicators for the stock are Bearish and S&P gives DFS a very positive 5 STAR (out of 5) strong buy rating. DFS appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Apr '10 12.50 covered call (DFS DV) for a net debit in the $11.65 area. That is also the break even stock price for this trade. This covered call has a 169 day duration, provides 22.07% downside protection and a 7.30% assigned return rate for a 15.76% annualized return rate (comparison purposes only). Discover has a current annual dividend yield of 0.54%. [FBB-Seven Summits Research]

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