The Travelers Companies Inc. (TRV) 11/20/09 PriceWatch Alert Bullish Price Movement

Posted: Friday, November 20, 2009 8:45 AM EDT
By: Market Intelligence Center Staff

The Travelers Companies Inc. (NYSE: TRV) closed yesterday at $52.68. So far the stock has hit a 52-week low of $33.07 and 52-week high of $54.47. Travelers stock has been showing support around 51.61 and resistance in the 53.89 range. Technical indicators for the stock are Bullish and S&P gives TRV a very positive 5 STAR (out of 5) strong buy rating. TRV appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Apr '10 50 covered call (TRV DJ) for a net debit in the $47.58 area. That is also the break even stock price for this trade. This covered call has a 148 day duration, provides 9.68% downside protection and a 5.09% assigned return rate for a 12.54% 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 TRV Jan '11 30 Call (OWX AF) and selling the Apr '10 50 call (TRV DJ) for a $17.80 debit. The trade has a 148 day life and would provide 9.26% downside protection and a 12.36% assigned return rate for a 30.00% annualized return rate (for comparison purposes only). Travelers has a current annual dividend yield of 2.26%. [FBB-Seven Summits Research]