JPMorgan (JPM) 11/18/09 PriceWatch Alert At $39.76 Break Even

Posted: Wednesday, November 18, 2009 8:43 AM EDT
By: Market Intelligence Center Staff

JPMorgan (NYSE: JPM) closed yesterday at $43.16. So far the stock has hit a 52-week low of $14.96 and 52-week high of $47.47. JPMorgan stock has been showing support around 42.31 and resistance in the 43.61 range. Technical indicators for the stock are Bearish and S&P gives JPM a very positive 5 STAR (out of 5) strong buy rating. JPM appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Mar '10 44 covered call (JPM CX) for a net debit in the $39.76 area. That is also the break even stock price for this trade. This covered call has a 122 day duration, provides 7.88% downside protection and a 10.66% assigned return rate for a 31.90% 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 JPM Jan '11 25 Call (VJP AE) and selling the Mar '10 44 call (JPM CX) for a $15.95 debit. The trade has a 122 day life and would provide 5.12% downside protection and a 19.12% assigned return rate for a 57.00% annualized return rate (for comparison purposes only). JPMorgan has a current annual dividend yield of 0.47%. [WBA-Seven Summits Research]