Johnson Controls (JCI) Trading Just Shy Of Its 52 Week High

Posted: Wednesday, March 03, 2010 8:37 AM EDT
By: Market Intelligence Center Staff

Johnson Controls (NYSE: JCI) closed yesterday at $31.62. So far the stock has hit a 52-week low of $8.35 and 52-week high of $32.11. Johnson Controls stock has been showing support around 31.15 and resistance in the 32.35 range. Technical indicators for the stock are Bullish and S&P gives JCI a very positive 5 STAR (out of 5) strong buy rating. JCI appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jul '10 32 covered call for a net debit in the $29.67 area. That is also the break even stock price for this trade. This covered call has a 136 day duration, provides 6.17% downside protection and a 7.85% assigned return rate for a 21.08% 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 JCI Jan '11 20 Call and selling the Jul '10 32 call for a $10.15 debit. The trade has a 136 day life and would provide 4.65% downside protection and an 18.23% assigned return rate for a 49.00% annualized return rate (for comparison purposes only). Johnson Controls has a current annual dividend yield of 1.67%. [WBA-Seven Summits Research]