Macy's Inc. (M) 11/12/09 PriceWatch Alert At $13.66 Break Even

Posted: Thursday, November 12, 2009 8:36 AM EDT
By: Market Intelligence Center Staff

Macy's Inc. (NYSE: M) closed yesterday at $17.86. 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 17.01 and resistance in the 19.09 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 $13.66 area. That is also the break even stock price for this trade. This covered call has a 191 day duration, provides 23.52% downside protection and a 9.81% assigned return rate for an 18.75% 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 7.50 Call (VFD AU) and selling the May '10 15 call (M EC) for a $6.60 debit. The trade has a 191 day life and would provide 21.05% downside protection and a 13.64% assigned return rate for a 26.00% annualized return rate (for comparison purposes only). Macy's has a current annual dividend yield of 1.03%. [THA-Seven Summits Research]