JPMorgan (JPM) 11/2/09 PriceWatch Alert Up To 35.04% Return

Posted: Monday, November 02, 2009 8:08 AM EDT

JPMorgan (NYSE: JPM) ended the last trading session at $41.77. So far the stock has hit a 52-week low of $14.96 and 52-week high of $47.47. JPMorgan stock has been showing support around 40.25 and resistance in the 44.73 range. Technical indicators for the stock are Bearish and S&P gives JPM a very positive 5 STAR (out of 5) strong buy rating. JPM appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Mar '10 43 covered call (JPM CW) for a net debit in the $37.97 area. That is also the break even stock price for this trade. This covered call has a 138 day duration, provides 9.10% downside protection and a 13.25% assigned return rate for a 35.04% 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 JPM Jan '11 22.50 Call (VJP AX) and selling the Mar '10 43 call (JPM CW) for a $16.70 debit. The trade has a 138 day life and would provide 6.15% downside protection and a 22.75% assigned return rate for a 60.00% annualized return rate (for comparison purposes only). JPMorgan has a current annual dividend yield of 0.47%. [ABR-Seven Summits Research]

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