Starbucks (SBUX) Showing Bullish Technicals With 1.65% Dividend Yield

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Dec 11, 2012 ( via COMTEX) -- Starbucks Corp (NASDAQ:SBUX) closed Monday's trading session at $52.96. In the past year, the stock has hit a 52-week low of $42.67 and 52-week high of $62.00. Starbucks (SBUX) stock has been showing support around $52.25 and resistance in the $54.05 range. Technical indicators for the stock are Bullish and S&P gives Starbucks (SBUX) a positive 4 STARS (out of 5) buy rating. For a hedged play on Starbucks (SBUX), look at the Apr '13 $55.00 covered call for a net debit in the $50.62 area. That is also the break-even stock price for this trade. This covered call has a duration of 130 days, provides 4.42% downside protection and an assigned return rate of 8.65% for an annualized return rate of 24.29% (for comparison purposes only). A lower-cost hedged play for Starbucks (SBUX) would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the Starbucks (SBUX) Jan '14 $40.00 call and selling the Apr '13 $55.00 call for a total debit of $12.06. The trade has a lifespan of 130 days and would provide 1.70% downside protection and an assigned return rate of 24.38% for an annualized return rate of 68% (for comparison purposes only). Starbucks (SBUX) has a current annual dividend yield of 1.65%.

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