Walmart Stores (WMT) Trading Near $51.95 Support Level

Walmart Stores (NYSE:WMT) closed Monday's dramatic trading session at $52.29. In the past year, the stock has hit a 52-week low of $47.77 and 52-week high of $57.90. Walmart Stores (WMT) stock has been showing support around $51.95 and resistance in the $52.93 range. Technical indicators for the stock are Bearish and S&P gives Walmart Stores (WMT) a very positive 5 STARS (out of 5) strong buy rating. For a hedged play on Walmart Stores (WMT), look at the Dec '11 $50.00 covered call for a net debit in the $48.69 area. That is also the break-even stock price for this trade. This covered call has a duration of 172 days, provides 6.88% downside protection and an assigned return rate of 2.69% for an annualized return rate of 5.71% (for comparison purposes only). A lower-cost hedged play for Walmart Stores (WMT) would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the Walmart Stores (WMT) Jan '12 $45.00 call and selling the Dec '11 $50.00 call for a total debit of $4.30. The trade has a lifespan of 172 days and would provide 5.72% downside protection and an assigned return rate of 16.28% for an annualized return rate of 35% (for comparison purposes only).