Verizon Communications (VZ) 11/10/09 PriceWatch Alert Shows Bullish Technicals

Posted: Tuesday, November 10, 2009 8:47 AM EDT
By: Market Intelligence Center Staff

Verizon Communications (NYSE: VZ) closed yesterday at $30.17. So far the stock has hit a 52-week low of $26.10 and 52-week high of $34.90. Verizon Communications stock has been showing support around 29.59 and resistance in the 30.49 range. Technical indicators for the stock are Bullish and S&P gives VZ a positive 4 STAR (out of 5) buy rating. VZ appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at an Apr '10 31 covered call (VZ DP) for a net debit in the $29.10 area. That is also the break even stock price for this trade. This covered call has a 158 day duration, provides 3.55% downside protection and a 6.53% assigned return rate for a 15.08% 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 VZ Jan '11 25 Call (VBU AE) and selling the Apr '10 31 call (VZ DP) for a $4.63 debit. The trade has a 158 day life and would provide 1.79% downside protection and a 29.59% assigned return rate for a 68.00% annualized return rate (for comparison purposes only). Verizon Communications has a current annual dividend yield of 6.48%. [ATU-Seven Summits Research]