Hartford Financial (HIG) 11/3/09 PriceWatch Alert Targets 24.24% Return

Posted: Tuesday, November 03, 2009 8:38 AM EDT
By: Market Intelligence Center Staff

Hartford Financial (NYSE: HIG) closed yesterday at $24.81. So far the stock has hit a 52-week low of $3.33 and 52-week high of $29.59. Hartford Financial stock has been showing support around 23.32 and resistance in the 26.44 range. Technical indicators for the stock are Bearish and S&P gives HIG a neutral 3 STAR (out of 5) hold rating. HIG appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '10 19 covered call (HIG AS) for a net debit in the $18.11 area. That is also the break even stock price for this trade. This covered call has a 74 day duration, provides 27.01% downside protection and a 4.91% assigned return rate for a 24.24% 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 HIG Jan '11 5 Call (OZJ AA) and selling the Jan '10 19 call (HIG AS) for a $13.30 debit. The trade has a 74 day life and would provide 26.24% downside protection and a 5.26% assigned return rate for a 26.00% annualized return rate (for comparison purposes only). Hartford Financial has a current annual dividend yield of 0.78%. [ATU-Seven Summits Research]