Nordstrom (JWN) 11/3/09 PriceWatch Alert Down To $27.99 Break Even

Posted: Tuesday, November 03, 2009 8:44 AM EDT
By: Market Intelligence Center Staff

Nordstrom (NYSE: JWN) closed yesterday at $32.29. So far the stock has hit a 52-week low of $6.61 and 52-week high of $36.52. Nordstrom stock has been showing support around 30.94 and resistance in the 33.78 range. Technical indicators for the stock are Bullish and S&P gives JWN a neutral 3 STAR (out of 5) hold rating. JWN appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at an Apr '10 32 covered call (JDI DF) for a net debit in the $27.99 area. That is also the break even stock price for this trade. This covered call has a 165 day duration, provides 13.32% downside protection and a 14.33% assigned return rate for a 31.69% 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 JWN Jan '11 20 Call (VNZ AD) and selling the Apr '10 32 call (JDI DF) for a $9.55 debit. The trade has a 165 day life and would provide 8.49% downside protection and a 25.65% assigned return rate for a 57.00% annualized return rate (for comparison purposes only). Nordstrom has a current annual dividend yield of 1.99%. [ATU-Seven Summits Research]