Honeywell International (HON) 11/3/09 PriceWatch Alert Shows Bearish Technicals

Posted: Tuesday, November 03, 2009 8:30 AM EDT
By: Market Intelligence Center Staff

Honeywell International (NYSE: HON) closed yesterday at $36.19. So far the stock has hit a 52-week low of $23.06 and 52-week high of $40.55. Honeywell International stock has been showing support around 35.24 and resistance in the 36.92 range. Technical indicators for the stock are Bearish and S&P gives HON a very positive 5 STAR (out of 5) strong buy rating. HON appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Jan '10 37 covered call (HON AY) for a net debit in the $34.69 area. That is also the break even stock price for this trade. This covered call has a 74 day duration, provides 4.14% downside protection and a 6.66% assigned return rate for a 32.84% 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 HON Jan '11 22.50 Call (VAD AX) and selling the Jan '10 37 call (HON AY) for a $12.50 debit. The trade has a 74 day life and would provide 3.29% downside protection and a 16.00% assigned return rate for a 79.00% annualized return rate (for comparison purposes only). Honeywell International has a current annual dividend yield of 3.25%. [ATU-Seven Summits Research]