Macy's Inc. (M) 11/11/09 PriceWatch Alert At $13.83 Break Even

Posted: Wednesday, November 11, 2009 8:36 AM EDT
By: Market Intelligence Center Staff

Macy's Inc. (NYSE: M) closed yesterday at $19.43. 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 18.71 and resistance in the 20.13 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 May '10 15 covered call (M EC) for a net debit in the $13.83 area. That is also the break even stock price for this trade. This covered call has a 192 day duration, provides 28.82% downside protection and an 8.46% assigned return rate for a 16.08% 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 M Jan '11 5 Call (VFD AA) and selling the May '10 15 call (M EC) for a $9.00 debit. The trade has a 192 day life and would provide 27.95% downside protection and an 11.11% assigned return rate for a 21.00% annualized return rate (for comparison purposes only). Macy's has a current annual dividend yield of 1.03%. [WBA-Seven Summits Research]