Unum Group (UNM) 11/16/09 PriceWatch Alert Targets 16.90% Return

Posted: Monday, November 16, 2009 8:26 AM EDT
By: Market Intelligence Center Staff

Unum Group (NYSE: UNM) ended the last trading session at $19.65. So far the stock has hit a 52-week low of $7.61 and 52-week high of $23.25. Unum Group stock has been showing support around 19.32 and resistance in the 20.00 range. Technical indicators for the stock are Bearish and S&P gives UNM a neutral 3 STAR (out of 5) hold rating. UNM appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Mar '10 17.50 covered call (UNM CW) for a net debit in the $16.55 area. That is also the break even stock price for this trade. This covered call has a 124 day duration, provides 15.78% downside protection and a 5.74% assigned return rate for a 16.90% 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 UNM Jan '11 10 Call (OVU AB) and selling the Mar '10 17.50 call (UNM CW) for a $7.00 debit. The trade has a 124 day life and would provide 13.49% downside protection and a 7.14% assigned return rate for a 21.00% annualized return rate (for comparison purposes only). Unum Group has a current annual dividend yield of 1.61%. [ABR-Seven Summits Research]