Limited Brands (LTD) Showing Bullish Price Movement With Support At 17.26

Posted: Wednesday, November 04, 2009 8:58 AM EDT
By: Market Intelligence Center Staff

Limited Brands (NYSE: LTD) closed yesterday at $17.95. So far the stock has hit a 52-week low of $5.98 and 52-week high of $19.99. Limited Brands stock has been showing support around 17.26 and resistance in the 18.48 range. Technical indicators for the stock are Bullish and S&P gives LTD a neutral 3 STAR (out of 5) hold rating. LTD appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a May '10 15 covered call (LTD EC) for a net debit in the $13.95 area. That is also the break even stock price for this trade. This covered call has a 199 day duration, provides 22.28% downside protection and a 7.53% assigned return rate for a 13.81% 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 LTD Jan '11 5 Call (VLD AA) and selling the May '10 15 call (LTD EC) for an $8.85 debit. The trade has a 199 day life and would provide 22.84% downside protection and a 12.99% assigned return rate for a 24.00% annualized return rate (for comparison purposes only). Limited Brands has a current annual dividend yield of 3.41%. [WBA-Seven Summits Research]