AFLAC (AFL) Up 3% Friday And Showing Bullish Technicals

AFLAC (NYSE: AFL) closed Friday at $45.01. So far the stock has hit a 52-week low of $10.83 and 52-week high of $49.36. AFLAC stock has been showing support around 42.74 and resistance in the 46.18 range. Technical indicators for the stock are Bullish and S&P gives AFL a neutral 3 STAR (out of 5) hold rating. AFL appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '10 46 covered call (AJO AV) for a net debit in the $41.91 area. That is also the break even stock price for this trade. This covered call has a 96 day duration, provides 6.89% downside protection and a 9.76% assigned return rate for a 37.10% 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 AFL Jan '11 25 Call (ZUR AE) and selling the Jan '10 46 call (AJO AV) for a $17.80 debit. The trade has a 96 day life and would provide 4.91% downside protection and a 17.98% assigned return rate for a 68.00% annualized return rate (for comparison purposes only). AFLAC has a current annual dividend yield of 2.59%.

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