Carter Worth Is Bullish On Altria Group Inc
He likes its 4.11 percent dividend yield because it is higher than the yield investors can get in Utilities SPDR (ETF) (NYSE: XLU), iShares Dow Jones US Real Estate (ETF) (NYSE: IYR), iShares Select Dividend ETF (NYSE: DVY), SPDR S&P 500 ETF Trust (NYSE: SPY) and 10-Year Treasuries and it had significantly better return than these assets in the last two years.
The stock is not sensitive to interest rates changes by the Fed, which makes it a great defensive play, Worth thinks.
Worth used his technical analysis skills to identify a head and shoulders bottom pattern on a chart of the stock, which makes him believe that Altria Group Inc is going higher. He also showed a bullish wedge on the chart.
Mike Khouw suggested an options strategy to make a bullish bet in the name and exploit increased volatility. He would sell the October 55 puts for $1, which is almost 2 percent of the current market price. The trade breaks even at $54. If Altria Group Inc trades lower, Khouw would have to buy it at $55 and in that case he recommends selling calls against the long position.
Dan Nathan would use a different approach. He would use a risk reversal strategy, selling an out of the money put and buying the out of the money call.
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