A T and T (T) PriceWatch Alert for November 25, 2009

Posted: Wednesday, November 25, 2009 8:14 AM EDT
By: Market Intelligence Center Staff

A T and T (NYSE: T) closed yesterday at $27.10. So far the stock has hit a 52-week low of $21.44 and 52-week high of $30.65. A T and T stock has been showing support around 26.44 and resistance in the 27.58 range. Technical indicators for the stock are Bullish and S&P gives T a very positive 5 STAR (out of 5) strong buy rating. T appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at an Apr '10 27 covered call (T DA) for a net debit in the $25.80 area. That is also the break even stock price for this trade. This covered call has a 143 day duration, provides 4.80% downside protection and a 4.65% assigned return rate for an 11.87% 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 T Jan '11 22.50 Call (VFE AX) and selling the Apr '10 27 call (T DA) for a $3.90 debit. The trade has a 143 day life and would provide 2.58% downside protection and a 15.38% assigned return rate for a 39.00% annualized return rate (for comparison purposes only). A T and T has a current annual dividend yield of 6.30%. [WBA-Seven Summits Research]