International Game Technology (IGT) 11/3/09 PriceWatch Alert With $14.15 Break Even

Posted: Tuesday, November 03, 2009 8:32 AM EDT
By: Market Intelligence Center Staff

International Game Technology (NYSE: IGT) closed yesterday at $18.45. So far the stock has hit a 52-week low of $6.81 and 52-week high of $23.30. International Game Technology stock has been showing support around 17.00 and resistance in the 19.54 range. Technical indicators for the stock are Bearish and S&P gives IGT a neutral 3 STAR (out of 5) hold rating. IGT appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Apr '10 15 covered call (IGT DC) for a net debit in the $14.15 area. That is also the break even stock price for this trade. This covered call has a 165 day duration, provides 23.31% downside protection and a 6.01% assigned return rate for a 13.29% 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 IGT Jan '11 5 Call (VGG AA) and selling the Apr '10 15 call (IGT DC) for a $9.40 debit. The trade has a 165 day life and would provide 21.95% downside protection and a 6.38% assigned return rate for a 14.00% annualized return rate (for comparison purposes only). International Game Technology has a current annual dividend yield of 1.29%. [ATU-Seven Summits Research]