J C Penny (JCP) 11/6/09 PriceWatch Alert Technicals Showing Bearish

Posted: Friday, November 06, 2009 8:34 AM EDT
By: Market Intelligence Center Staff

J C Penny (NYSE: JCP) closed yesterday at $30.32. So far the stock has hit a 52-week low of $13.71 and 52-week high of $37.21. J C Penny stock has been showing support around 28.47 and resistance in the 32.65 range. Technical indicators for the stock are Bearish and S&P gives JCP a positive 4 STAR (out of 5) buy rating. JCP appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Feb '10 29 covered call (HZP BC) for a net debit in the $26.72 area. That is also the break even stock price for this trade. This covered call has a 106 day duration, provides 11.87% downside protection and an 8.53% assigned return rate for a 29.38% 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 JCP Jan '11 17.50 Call (ORO AW) and selling the Feb '10 29 call (HZP BC) for a $10.15 debit. The trade has a 106 day life and would provide 8.81% downside protection and a 13.30% assigned return rate for a 46.00% annualized return rate (for comparison purposes only). J C Penny has a current annual dividend yield of 2.44%. [FBB-Seven Summits Research]