GlaxoSmithKline PLC (GSK) 11/11/09 PriceWatch Alert Targets 14.91% Return

Posted: Wednesday, November 11, 2009 8:10 AM EDT

GlaxoSmithKline PLC (NYSE: GSK) closed yesterday at $41.35. So far the stock has hit a 52-week low of $27.15 and 52-week high of $42.18. GlaxoSmithKline PLC stock has been showing support around 41.10 and resistance in the 41.52 range. Technical indicators for the stock are Bullish and S&P gives GSK a neutral 3 STAR (out of 5) hold rating. GSK appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '10 40 covered call (GSK AH) for a net debit in the $38.95 area. That is also the break even stock price for this trade. This covered call has a 66 day duration, provides 5.80% downside protection and a 2.70% assigned return rate for a 14.91% 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 GSK Jan '11 25 Call (VLX AE) and selling the Jan '10 40 call (GSK AH) for a $14.20 debit. The trade has a 66 day life and would provide 5.20% downside protection and a 5.63% assigned return rate for a 31.00% annualized return rate (for comparison purposes only). GlaxoSmithKline PLC has a current annual dividend yield of 4.48%. [WBA-Seven Summits Research]

Click Symbol For More News On: (GSK)