Woolworths Trade Today Only
March 18th, 2009 by Lawrence Grasso
Closing Data
| current | change | % | |
|---|---|---|---|
| Dow Jones | 7395.7 | 178.73 | 2.5% |
| NASDAQ | 1462.11 | 58.09 | 4.1% |
| S P 500 | 778.12 | 24.23 | 3.2% |
| FTSE 100 | 3857.1 | -6.89 | -0.2% |
| Nikkei 225 | 7949.13 | 244.98 | 3.2% |
| SPI Futures | 3459 | -20 | -0.6% |
| All Ords | 3,393.00 | 96.1 | 2.9% |
| Oil | 48.97 | 1.64 | 3.5% |
| Gold | 916.8 | -5.2 | -0.6% |
| Silver | 12.67 | -0.22 | -1.7% |
| Aluminium | 1316.5 | 5.5 | 0.4% |
| Copper | 3761 | 71 | 1.9% |
| Lead | 1333.5 | 48.5 | 3.8% |
| Nickel | 10005 | 170 | 1.7% |
| Tin | 10475 | -75 | -0.7% |
| Zinc | 1226 | -4.5 | -0.4% |
You know things have changed on Wall Street when the housing industry saves the day. A surprise government report that home construction picked up in February caught traders off guard and injected a week-old stock market rally with new energy Tuesday.
Stocks of homebuilders and banks jumped as bullish investors saw yet another sign that the deeply troubled economy was beginning to show signs of stabilizing.
Tuesday's rally, which picked up steam as the day went on, wound up pushing the Dow Jones industrial average up 179 points or 2.5 percent to 7395.7. It was the market's fifth gain over the past six trading days.
Australian shares are seen opening firmer on Wednesday, extending their rally to a fourth session, on the back of strong gains on Wall Street.
DJS
Upmarket Australian department store chain David Jones Ltd. (DJS) Wednesday booked a 2.4% rise in interim net profit to $91.2 million, from $89.0 million a year ago. Revenue for the six months to Jan. 24 fell 6.4% to $1.06 billion from $1.13 billion a year ago and the company declared a dividend of 11 cents a share, unchanged from a year ago.
Woolworths Trade Today Only – possible 3.9% return for 5 weeks
Take a look at the chart below...
As you can see Woolworths Ltd is in a sideways trading range. It's currently trading at $25.45 and is well supported at $24.50 and tends to find resistance around $28.50. WOW is ex dividend in 3 days paying a 48 cent interim dividend.
The right ingredients
You might remember from Super Trader, an upward or sideways channel, an established trading range and enough volatility to generate good premiums generally provide an excellent environment for covered calls. Buy the share, sell the call options, keep the premium or sell for a profit.
Let's do the numbers on WOW today...
| Debit | Credit | |
| Buy 1000 WOW shares today | $25,450 | |
| Sell April $26 call option | $550 | |
| Outcome - you are exercised | Debit | Credit |
| Stock price rises above $26.00 | $26,000 | |
| Dividend 48cents | $480 | |
| Brokerage | $594.5 | |
| Net Gain for the month | $985.5 (3.9%) | |
| Outcome - you are not exercised | Debit | Credit |
| Call premium | $550 | |
| Dividend 48cents | $480 | |
| Brokerage | $334.5 | |
| Net Gain for the month | $695.5 (2.7%) |
Strong fundamentals
Woolworths is known as a defensive stock and in times of market uncertainty you will find that the stock will actually outperform other Blue chips. With a solid asset base, a continual growth strategy and a decent dividend, Woolworths is a our pick for a stock that will weather the storm.
* Returns are not guaranteed
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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