Hartford Financial (HIG) 11/6/09 PriceWatch Alert Targets 22.62% Return

Posted: Friday, November 06, 2009 8:08 AM EDT

Hartford Financial (NYSE: HIG) closed yesterday at $24.12. 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 22.81 and resistance in the 25.45 range. Technical indicators for the stock are Bullish 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 Mar '10 18 covered call (HIG CK) for a net debit in the $16.62 area. That is also the break even stock price for this trade. This covered call has a 134 day duration, provides 31.09% downside protection and an 8.30% assigned return rate for a 22.62% 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 Mar '10 18 call (HIG CK) for an $11.70 debit. The trade has a 134 day life and would provide 30.76% downside protection and an 11.11% assigned return rate for a 30.00% annualized return rate (for comparison purposes only). Hartford Financial has a current annual dividend yield of 0.77%. [FBB-Seven Summits Research]

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