Nordstrom (JWN) 11/13/09 PriceWatch Alert Up To 27.85% Return

Posted: Friday, November 13, 2009 8:38 AM EDT
By: Market Intelligence Center Staff

Nordstrom (NYSE: JWN) closed yesterday at $34.51. So far the stock has hit a 52-week low of $6.61 and 52-week high of $36.52. Nordstrom stock has been showing support around 33.17 and resistance in the 36.13 range. Technical indicators for the stock are Bullish and S&P gives JWN a neutral 3 STAR (out of 5) hold rating. JWN appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jan '10 32 covered call (JDI AF) for a net debit in the $30.51 area. That is also the break even stock price for this trade. This covered call has a 64 day duration, provides 11.59% downside protection and a 4.88% assigned return rate for a 27.85% 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 JWN Jan '11 12.50 Call (VNZ AV) and selling the Jan '10 32 call (JDI AF) for an $18.60 debit. The trade has a 64 day life and would provide 9.88% downside protection and a 4.84% assigned return rate for a 28.00% annualized return rate (for comparison purposes only). Nordstrom has a current annual dividend yield of 1.80%. [FBB-Seven Summits Research]