International Game Technology (IGT) 11/6/09 PriceWatch Alert Targets 17.28% Return

Posted: Friday, November 06, 2009 8:40 AM EDT

International Game Technology (NYSE: IGT) closed yesterday at $18.56. So far the stock has hit a 52-week low of $6.81 and 52-week high of $23.30. International Game Technology stock has been showing support around 17.71 and resistance in the 19.59 range. Technical indicators for the stock are Bearish and S&P gives IGT a neutral 3 STAR (out of 5) hold rating. IGT appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Apr '10 16 covered call (IGT DP) for a net debit in the $14.86 area. That is also the break even stock price for this trade. This covered call has a 162 day duration, provides 19.94% downside protection and a 7.67% assigned return rate for a 17.28% 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 IGT Jan '11 5 Call (VGG AA) and selling the Apr '10 16 call (IGT DP) for a $9.95 debit. The trade has a 162 day life and would provide 19.45% downside protection and a 10.55% assigned return rate for a 24.00% annualized return rate (for comparison purposes only). International Game Technology has a current annual dividend yield of 1.30%. [FBB-Seven Summits Research]

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