Northern Trust (NTRS) Higher Yesterday And Trading In Tight Support/Resistance Range

Northern Trust (NasdaqNM: NTRS) closed yesterday at $49.79. So far the stock has hit a 52-week low of $33.88 and 52-week high of $66.08. Northern Trust stock has been showing support around 49.10 and resistance in the 50.84 range. Technical indicators for the stock are Bearish and S&P gives NTRS a neutral 3 STAR (out of 5) hold rating. NTRS appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Jan '10 50 covered call (NRQ AJ) for a net debit in the $47.14 area. That is also the break even stock price for this trade. This covered call has a 72 day duration, provides 5.32% downside protection and a 6.07% assigned return rate for a 30.76% 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 NTRS Jan '11 22.50 Call (XGP AX) and selling the Jan '10 50 call (NRQ AJ) for a $25.00 debit. The trade has a 72 day life and would provide 4.60% downside protection and a 10.00% assigned return rate for a 51.00% annualized return rate (for comparison purposes only). Northern Trust has a current annual dividend yield of 2.21%.

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