Unum Group (UNM) 11/5/09 PriceWatch Alert At $16.18 Break Even

Posted: Thursday, November 05, 2009 8:09 AM EDT
By: Market Intelligence Center Staff

Unum Group (NYSE: UNM) closed yesterday at $19.18. So far the stock has hit a 52-week low of $7.61 and 52-week high of $23.25. Unum Group stock has been showing support around 18.43 and resistance in the 20.57 range. Technical indicators for the stock are Bearish and S&P gives UNM a neutral 3 STAR (out of 5) hold rating. UNM appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Mar '10 17.50 covered call (UNM CW) for a net debit in the $16.18 area. That is also the break even stock price for this trade. This covered call has a 135 day duration, provides 15.64% downside protection and an 8.16% assigned return rate for a 22.06% 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 UNM Jan '11 10 Call (OVU AB) and selling the Mar '10 17.50 call (UNM CW) for a $6.90 debit. The trade has a 135 day life and would provide 11.89% downside protection and an 8.70% assigned return rate for a 24.00% annualized return rate (for comparison purposes only). Unum Group has a current annual dividend yield of 1.63%. [THA-Seven Summits Research]