General Electric (GE) 11/12/09 PriceWatch Alert Down To $14.21 Break Even

Posted: Thursday, November 12, 2009 8:16 AM EDT
By: Market Intelligence Center Staff

General Electric (NYSE: GE) closed yesterday at $15.83. So far the stock has hit a 52-week low of $5.73 and 52-week high of $19.30. General Electric stock has been showing support around 15.50 and resistance in the 16.14 range. Technical indicators for the stock are Bullish and S&P gives GE a neutral 3 STAR (out of 5) hold rating. GE appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jun '10 16 covered call (GEW FQ) for a net debit in the $14.21 area. That is also the break even stock price for this trade. This covered call has a 219 day duration, provides 10.23% downside protection and a 12.60% assigned return rate for a 20.99% 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 GE Jan '11 10 Call (VGE AB) and selling the Jun '10 16 call (GEW FQ) for a $4.73 debit. The trade has a 219 day life and would provide 6.95% downside protection and a 26.85% assigned return rate for a 45.00% annualized return rate (for comparison purposes only). General Electric has a current annual dividend yield of 2.52%. [THA-Seven Summits Research]