MetLife (MET) 11/20/09 PriceWatch Alert Up To 11.40% Downside Protection

Posted: Friday, November 20, 2009 8:46 AM EDT
By: Market Intelligence Center Staff

MetLife (NYSE: MET) closed yesterday at $34.20. So far the stock has hit a 52-week low of $11.37 and 52-week high of $41.45. MetLife stock has been showing support around 33.36 and resistance in the 35.48 range. Technical indicators for the stock are Bearish and S&P gives MET a positive 4 STAR (out of 5) buy rating. MET appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jun '10 36 covered call (JAJ FA) for a net debit in the $30.30 area. That is also the break even stock price for this trade. This covered call has a 211 day duration, provides 11.40% downside protection and an 18.81% assigned return rate for a 32.54% 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 MET Jan '11 22.50 Call (VRA AX) and selling the Jun '10 36 call (JAJ FA) for a $9.90 debit. The trade has a 211 day life and would provide 5.26% downside protection and a 36.36% assigned return rate for a 63.00% annualized return rate (for comparison purposes only). MetLife has a current annual dividend yield of 2.08%. [FBB-Seven Summits Research]