Walmart Stores (WMT) 11/19/09 PriceWatch Alert With Support Around $53.26

Posted: Thursday, November 19, 2009 8:40 AM EDT

Walmart Stores (NYSE: WMT) closed yesterday at $54.15. 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 53.26 and resistance in the 54.84 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 Mar '10 52.50 covered call (WMT CX) for a net debit in the $51.15 area. That is also the break even stock price for this trade. This covered call has a 121 day duration, provides 5.54% downside protection and a 2.64% assigned return rate for a 7.96% 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 Mar '10 52.50 call (WMT CX) for an $11.50 debit. The trade has a 121 day life and would provide 4.89% downside protection and an 8.70% assigned return rate for a 26.00% annualized return rate (for comparison purposes only). Walmart Stores has a current annual dividend yield of 2.05%. [THA-Seven Summits Research]

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