Omnicom Group (OMC) 11/3/09 PriceWatch Alert Bearish Price Movement

Posted: Tuesday, November 03, 2009 8:28 AM EDT
By: Market Intelligence Center Staff

Omnicom Group (NYSE: OMC) closed yesterday at $34.70. So far the stock has hit a 52-week low of $20.09 and 52-week high of $39.11. Omnicom Group stock has been showing support around 33.91 and resistance in the 35.45 range. Technical indicators for the stock are Bearish and S&P gives OMC a weak 2 STAR (out of 5) sell rating. OMC appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '10 35 covered call (OMC AG) for a net debit in the $33.05 area. That is also the break even stock price for this trade. This covered call has a 74 day duration, provides 4.76% downside protection and a 5.90% assigned return rate for a 29.10% 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 OMC Jan '11 22.50 Call (OBG AX) and selling the Jan '10 35 call (OMC AG) for an $11.65 debit. The trade has a 74 day life and would provide 1.59% downside protection and a 7.30% assigned return rate for a 36.00% annualized return rate (for comparison purposes only). Omnicom Group has a current annual dividend yield of 1.69%. [ATU-Seven Summits Research]