CBS (CBS) 11/3/09 PriceWatch Alert Support At Around $11.45

Posted: Tuesday, November 03, 2009 8:36 AM EDT

CBS (NYSE: CBS) closed yesterday at $12.12. So far the stock has hit a 52-week low of $3.06 and 52-week high of $14.04. CBS stock has been showing support around 11.45 and resistance in the 12.45 range. Technical indicators for the stock are Bullish and S&P gives CBS a weak 2 STAR (out of 5) sell rating. CBS appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jun '10 11 covered call (CBS FS) for a net debit in the $9.67 area. That is also the break even stock price for this trade. This covered call has a 228 day duration, provides 20.21% downside protection and a 13.75% assigned return rate for a 22.02% 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 CBS Jan '11 5 Call (ZCB AA) and selling the Jun '10 11 call (CBS FS) for a $4.80 debit. The trade has a 228 day life and would provide 19.14% downside protection and a 25.00% assigned return rate for a 40.00% annualized return rate (for comparison purposes only). CBS has a current annual dividend yield of 1.59%. [ATU-Seven Summits Research]

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