International Game Technology (IGT) 11/13/09 PriceWatch Alert With $17.31 Break Even

Posted: Friday, November 13, 2009 8:21 AM EDT
By: Market Intelligence Center Staff

International Game Technology (NYSE: IGT) closed yesterday at $20.06. So far the stock has hit a 52-week low of $6.81 and 52-week high of $23.30. International Game Technology stock has been showing support around 19.39 and resistance in the 21.21 range. Technical indicators for the stock are Bullish and S&P gives IGT a neutral 3 STAR (out of 5) hold rating. IGT appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Apr '10 19 covered call (IGT DS) for a net debit in the $17.31 area. That is also the break even stock price for this trade. This covered call has a 155 day duration, provides 13.71% downside protection and a 9.76% assigned return rate for a 22.99% 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 IGT Jan '11 10 Call (VGG AB) and selling the Apr '10 19 call (IGT DS) for an $8.15 debit. The trade has a 155 day life and would provide 9.52% downside protection and a 10.43% assigned return rate for a 25.00% annualized return rate (for comparison purposes only). International Game Technology has a current annual dividend yield of 1.17%. [FBB-Seven Summits Research]