Sony (SNE) 11/17/09 PriceWatch Alert Shows Bullish Technicals

Posted: Tuesday, November 17, 2009 8:39 AM EDT
By: Market Intelligence Center Staff

Sony (NYSE: SNE) closed yesterday at $28.63. 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 28.03 and resistance in the 29.15 range. Technical indicators for the stock are Bullish 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 $23.83 area. That is also the break even stock price for this trade. This covered call has a 151 day duration, provides 16.77% downside protection and a 4.91% assigned return rate for an 11.87% 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 $11.65 debit. The trade has a 151 day life and would provide 15.65% downside protection and a 7.30% assigned return rate for an 18.00% annualized return rate (for comparison purposes only). Sony has a current annual dividend yield of 0.87%. [ATU-Seven Summits Research]