Hartford Financial (HIG) 11/12/09 PriceWatch Alert At $20.13 Break Even

Posted: Thursday, November 12, 2009 8:39 AM EDT
By: Market Intelligence Center Staff

Hartford Financial (NYSE: HIG) closed yesterday at $25.68. So far the stock has hit a 52-week low of $3.33 and 52-week high of $29.59. Hartford Financial stock has been showing support around 24.95 and resistance in the 26.37 range. Technical indicators for the stock are Bullish and S&P gives HIG a neutral 3 STAR (out of 5) hold rating. HIG appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '10 21 covered call (HIG AR) for a net debit in the $20.13 area. That is also the break even stock price for this trade. This covered call has a 65 day duration, provides 21.61% downside protection and a 4.32% assigned return rate for a 24.27% 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 HIG Jan '11 5 Call (OZJ AA) and selling the Jan '10 21 call (HIG AR) for a $15.20 debit. The trade has a 65 day life and would provide 21.34% downside protection and a 5.26% assigned return rate for a 30.00% annualized return rate (for comparison purposes only). Hartford Financial has a current annual dividend yield of 0.79%. [THA-Seven Summits Research]