Macy's Inc. (M) PriceWatch Alert for November 19, 2009

Posted: Thursday, November 19, 2009 8:23 AM EDT
By: Market Intelligence Center Staff

Macy's Inc. (NYSE: M) closed yesterday at $17.67. So far the stock has hit a 52-week low of $5.07 and 52-week high of $20.84. Macy's stock has been showing support around 17.36 and resistance in the 18.16 range. Technical indicators for the stock are Bearish and S&P gives M a neutral 3 STAR (out of 5) hold rating. M appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a May '10 15 covered call (M EC) for a net debit in the $13.57 area. That is also the break even stock price for this trade. This covered call has an 184 day duration, provides 23.20% downside protection and a 10.54% assigned return rate for a 20.90% 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 M Jan '11 5 Call (VFD AA) and selling the May '10 15 call (M EC) for an $8.75 debit. The trade has an 184 day life and would provide 22.18% downside protection and a 14.29% assigned return rate for a 28.00% annualized return rate (for comparison purposes only). Macy's has a current annual dividend yield of 1.10%. [THA-Seven Summits Research]