Best Buy (BBY) 11/16/09 PriceWatch Alert Support Down To $41.11

Posted: Monday, November 16, 2009 8:15 AM EDT
By: Market Intelligence Center Staff

Best Buy (NYSE: BBY) ended the last trading session at $41.88. So far the stock has hit a 52-week low of $16.42 and 52-week high of $43.07. Best Buy stock has been showing support around 41.11 and resistance in the 42.63 range. Technical indicators for the stock are Bullish and S&P gives BBY a neutral 3 STAR (out of 5) hold rating. BBY appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Mar '10 45 covered call (BYY CI) for a net debit in the $39.75 area. That is also the break even stock price for this trade. This covered call has a 124 day duration, provides 5.09% downside protection and a 13.21% assigned return rate for a 38.88% 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 BBY Jan '11 25 Call (VBY AE) and selling the Mar '10 45 call (BYY CI) for a $15.62 debit. The trade has a 124 day life and would provide 3.01% downside protection and a 28.04% assigned return rate for an 83.00% annualized return rate (for comparison purposes only). Best Buy has a current annual dividend yield of 1.33%. [ABR-Seven Summits Research]