Amazon (AMZN) Showing Bullish Technicals With Support At $178.14

Posted: Thursday, February 16, 2012 8:13 AM EDT
By: Market Intelligence Center Staff

Amazon (NASDAQ:AMZN) closed Wednesday's negative trading session at $184.47. In the past year, the stock has hit a 52-week low of $160.59 and 52-week high of $246.71. Amazon (AMZN) stock has been showing support around $178.14 and resistance in the $194.70 range. Technical indicators for the stock are Bullish and S&P gives Amazon (AMZN) a neutral 3 STARS (out of 5) hold rating. For a hedged play on Amazon (AMZN), look at the Apr '12 $195.00 covered call for a net debit in the $178.67 area. That is also the break-even stock price for this trade. This covered call has a duration of 65 days, provides 3.14% downside protection and an assigned return rate of 9.14% for an annualized return rate of 51.32% (for comparison purposes only). A lower-cost hedged play for Amazon (AMZN) would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the Amazon (AMZN) Jan '13 $115.00 call and selling the Apr '12 $195.00 call for a total debit of $69.30. The trade has a lifespan of 65 days and would provide 0.09% downside protection and an assigned return rate of 15.44% for an annualized return rate of 87% (for comparison purposes only). Amazon (AMZN) has a current trailing average dividend yield of 0%. [MarketIntelligenceCenter.com]