Lennar (LEN) 11/19/09 PriceWatch Alert Down To $10.82 Break Even

Posted: Thursday, November 19, 2009 8:29 AM EDT
By: Market Intelligence Center Staff

Lennar (NYSE: LEN) closed yesterday at $14.62. So far the stock has hit a 52-week low of $3.42 and 52-week high of $17.66. Lennar stock has been showing support around 13.91 and resistance in the 15.33 range. Technical indicators for the stock are Bullish and S&P gives LEN a very positive 5 STAR (out of 5) strong buy rating. LEN appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a May '10 12 covered call (LEN EL) for a net debit in the $10.82 area. That is also the break even stock price for this trade. This covered call has an 184 day duration, provides 25.99% downside protection and a 10.91% assigned return rate for a 21.63% 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 LEN Jan '11 5 Call (OOW AA) and selling the May '10 12 call (LEN EL) for a $6.20 debit. The trade has an 184 day life and would provide 23.39% downside protection and a 12.90% assigned return rate for a 26.00% annualized return rate (for comparison purposes only). Lennar has a current annual dividend yield of 1.09%. [THA-Seven Summits Research]