EOT Trade Alert – February 25, 2010

| February 25, 2010

February 25, 2010

Trade Alert:

   Buy VZ July 17 2010 $30 Calls at $0.65 or better

Company Background:

Verizon Communications (VZ) provides wireline and wireless communications services in the US and 150 other countries.  The wireless segment is a joint venture with European-based Vodafone (VOD).

Short-Term Catalyst:

I’m going to keep this one short and sweet.  This is purely a technical play based on VZ’s chart patterns for the last ten years.

Verizon is a massive $82 billion market cap communications company.  It’s a ‘steady as she goes’ stock.  And it kicks off an annual dividend of $1.90 for a yield of 6.56%.

Right now, VZ is trading under $29.  VZ’s only dipped below this price level a handful of times in the past ten years.  And every time it reaches or dips below this level, it rebounds up into the mid $30s or higher.

Over the last year, the stock’s bounced between $28.50 and $33 three times.  I think VZ is going to head back toward $33 over the next few months.

I’ve found an option that looks undervalued to me.  Let’s grab these options before VZ rebounds.

Trade Details:

Underlying Stock Symbol: VZ
Current Bid-Ask Price: $0.57 – $0.59
Option “Buy Up To” Price: $0.65
Break-Even On Stock At Expiration: $30.65
Maximum Risk Per Contract: $65

Exit Strategy:

VZ is trading at $28.71 per share.  Resistance levels will be at $31.25 and again at $33.  Remember, we want this stock to move higher.  Support levels will be at $28 and $27.  Conservative investors should look to exit at the first support or resistance level. Aggressive investors may want to hold for a bigger move.



Category: EOT Trade Alert

About the Author ()

Comments are closed.