TJX Companies (TJX) 11/18/09 PriceWatch Alert Up To 23.63% Return

Posted: Wednesday, November 18, 2009 8:42 AM EDT
By: Market Intelligence Center Staff

TJX Companies (NYSE: TJX) closed yesterday at $38.91. So far the stock has hit a 52-week low of $17.80 and 52-week high of $40.64. TJX stock has been showing support around 37.06 and resistance in the 40.18 range. Technical indicators for the stock are Bullish and S&P gives TJX a positive 4 STAR (out of 5) buy rating. TJX appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at an Apr '10 40 covered call (TJX DH) for a net debit in the $36.46 area. That is also the break even stock price for this trade. This covered call has a 150 day duration, provides 6.30% downside protection and a 9.71% assigned return rate for a 23.63% 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 TJX Jan '11 25 Call (VJT AE) and selling the Apr '10 40 call (TJX DH) for a $12.40 debit. The trade has a 150 day life and would provide 3.88% downside protection and a 20.97% assigned return rate for a 51.00% annualized return rate (for comparison purposes only). TJX has a current annual dividend yield of 1.23%. [WBA-Seven Summits Research]