Sony (SNE) 11/16/09 PriceWatch Alert Targets 11.58% Return

Posted: Monday, November 16, 2009 8:02 AM EDT
By: Market Intelligence Center Staff

Sony (NYSE: SNE) ended the last trading session at $28.35. So far the stock has hit a 52-week low of $15.64 and 52-week high of $30.82. Sony stock has been showing support around 27.94 and resistance in the 28.74 range. Technical indicators for the stock are Bearish and S&P gives SNE a weak 2 STAR (out of 5) sell rating. SNE appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Apr '10 25 covered call (SNE DE) for a net debit in the $23.85 area. That is also the break even stock price for this trade. This covered call has a 152 day duration, provides 15.87% downside protection and a 4.82% assigned return rate for an 11.58% 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 SNE Jan '11 12.50 Call (VY AV) and selling the Apr '10 25 call (SNE DE) for an $11.75 debit. The trade has a 152 day life and would provide 14.46% downside protection and a 6.38% assigned return rate for a 15.00% annualized return rate (for comparison purposes only). Sony has a current annual dividend yield of 0.85%. [ABR-Seven Summits Research]