Black & Decker (BDK) 11/3/09 PriceWatch Alert At $42.44 Break Even

Posted: Tuesday, November 03, 2009 8:04 AM EDT
By: Market Intelligence Center Staff

Black & Decker (NYSE: BDK) closed yesterday at $47.34. So far the stock has hit a 52-week low of $20.10 and 52-week high of $52.49. Black & Decker stock has been showing support around 45.35 and resistance in the 49.17 range. Technical indicators for the stock are Bullish and S&P gives BDK a neutral 3 STAR (out of 5) hold rating. BDK appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jan '10 45 covered call (BDK AI) for a net debit in the $42.44 area. That is also the break even stock price for this trade. This covered call has a 74 day duration, provides 10.35% downside protection and a 6.03% assigned return rate for a 29.75% 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 BDK Jan '11 17.50 Call (OFE AW) and selling the Jan '10 45 call (BDK AI) for a $26.05 debit. The trade has a 74 day life and would provide 8.01% downside protection and a 5.57% assigned return rate for a 27.00% annualized return rate (for comparison purposes only). Black & Decker has a current annual dividend yield of 0.97%. [ATU-Seven Summits Research]