Procter and Gamble (PG) 11/10/09 PriceWatch Alert With Support Around $60.47

Posted: Tuesday, November 10, 2009 8:27 AM EDT
By: Market Intelligence Center Staff

Procter and Gamble (NYSE: PG) closed yesterday at $61.85. So far the stock has hit a 52-week low of $43.93 and 52-week high of $66.82. Procter and Gamble stock has been showing support around 60.47 and resistance in the 62.59 range. Technical indicators for the stock are Bullish and S&P gives PG a positive 4 STAR (out of 5) buy rating. PG appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jan '10 62.50 covered call (PG AZ) for a net debit in the $60.20 area. That is also the break even stock price for this trade. This covered call has a 67 day duration, provides 2.67% downside protection and a 3.82% assigned return rate for a 20.81% 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 PG Jan '11 45 Call (ZHB AI) and selling the Jan '10 62.50 call (PG AZ) for a $15.50 debit. The trade has a 67 day life and would provide 2.18% downside protection and a 12.90% assigned return rate for a 70.00% annualized return rate (for comparison purposes only). Procter and Gamble has a current annual dividend yield of 2.91%. [ATU-Seven Summits Research]