Walt Disney (DIS) 11/3/09 PriceWatch Alert Shows Bearish Technicals

Posted: Tuesday, November 03, 2009 8:39 AM EDT
By: Market Intelligence Center Staff

Walt Disney (NYSE: DIS) closed yesterday at $27.41. So far the stock has hit a 52-week low of $15.14 and 52-week high of $29.98. Walt Disney stock has been showing support around 26.58 and resistance in the 28.28 range. Technical indicators for the stock are Bearish and S&P gives DIS a positive 4 STAR (out of 5) buy rating. DIS appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at an Apr '10 28 covered call (DIS DV) for a net debit in the $25.36 area. That is also the break even stock price for this trade. This covered call has a 165 day duration, provides 7.48% downside protection and a 10.41% assigned return rate for a 23.03% 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 DIS Jan '11 17.50 Call (VDS AW) and selling the Apr '10 28 call (DIS DV) for an $8.50 debit. The trade has a 165 day life and would provide 5.14% downside protection and a 23.53% assigned return rate for a 52.00% annualized return rate (for comparison purposes only). Walt Disney has a current annual dividend yield of 1.24%. [ATU-Seven Summits Research]