Macy's Inc. (M) 11/6/09 PriceWatch Alert Down To $14.12 Break Even

Posted: Friday, November 06, 2009 8:36 AM EDT

Macy's Inc. (NYSE: M) closed yesterday at $18.02. So far the stock has hit a 52-week low of $5.07 and 52-week high of $20.84. Macy's stock has been showing support around 16.42 and resistance in the 18.88 range. Technical indicators for the stock are Bullish and S&P gives M a neutral 3 STAR (out of 5) hold rating. M appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Feb '10 15 covered call (M BC) for a net debit in the $14.12 area. That is also the break even stock price for this trade. This covered call has a 106 day duration, provides 21.64% downside protection and a 6.23% assigned return rate for a 21.46% 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 M Jan '11 2.50 Call (VFD AZ) and selling the Feb '10 15 call (M BC) for an $11.60 debit. The trade has a 106 day life and would provide 21.75% downside protection and a 7.76% assigned return rate for a 27.00% annualized return rate (for comparison purposes only). Macy's has a current annual dividend yield of 1.13%. [FBB-Seven Summits Research]

Click Symbol For More News On: (M)