Simon Property Group (SPG) 11/16/09 PriceWatch Alert Targets 8.44% Downside Protection

Posted: Monday, November 16, 2009 8:35 AM EDT
By: Market Intelligence Center Staff

Simon Property Group (NYSE: SPG) ended the last trading session at $72.29. So far the stock has hit a 52-week low of $24.27 and 52-week high of $76.05. Simon Property Group stock has been showing support around 70.91 and resistance in the 73.53 range. Technical indicators for the stock are Bullish and S&P gives SPG a very positive 5 STAR (out of 5) strong buy rating. SPG appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jan '10 70 covered call (SPG AN) for a net debit in the $66.19 area. That is also the break even stock price for this trade. This covered call has a 61 day duration, provides 8.44% downside protection and a 5.76% assigned return rate for a 34.44% 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 SPG Jan '11 30 Call (OVR AF) and selling the Jan '10 70 call (SPG AN) for a $36.85 debit. The trade has a 61 day life and would provide 7.53% downside protection and an 8.55% assigned return rate for a 51.00% annualized return rate (for comparison purposes only). Simon Property Group has a current annual dividend yield of 1.24%. [ABR-Seven Summits Research]