Walmart Stores (WMT) 11/17/09 PriceWatch Alert Support Down To $52.49

Posted: Tuesday, November 17, 2009 8:43 AM EDT
By: Market Intelligence Center Staff

Walmart Stores (NYSE: WMT) closed yesterday at $53.16. So far the stock has hit a 52-week low of $46.25 and 52-week high of $59.23. Walmart Stores stock has been showing support around 52.49 and resistance in the 53.79 range. Technical indicators for the stock are Bullish and S&P gives WMT a very positive 5 STAR (out of 5) strong buy rating. WMT appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jun '10 50 covered call (WMT FJ) for a net debit in the $48.41 area. That is also the break even stock price for this trade. This covered call has a 214 day duration, provides 8.94% downside protection and a 3.28% assigned return rate for a 5.60% 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 WMT Jan '11 40 Call (VWT AH) and selling the Jun '10 50 call (WMT FJ) for a $9.00 debit. The trade has a 214 day life and would provide 7.83% downside protection and an 11.11% assigned return rate for a 19.00% annualized return rate (for comparison purposes only). Walmart Stores has a current annual dividend yield of 2.05%. [ATU-Seven Summits Research]