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McAfee (MFE) Showing Bearish Technicals But Gets 4 Star Buy Rating From S&P

Posted: Thursday, January 28, 2010 8:57 AM EDT

McAfee (NYSE: MFE) closed yesterday at $38.61. So far the stock has hit a 52-week low of $26.65 and 52-week high of $45.68. McAfee stock has been showing support around 38.12 and resistance in the 39.42 range. Technical indicators for the stock are Bearish and S&P gives MFE a positive 4 STAR (out of 5) buy rating. MFE appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Jun '10 35 covered call for a net debit in the $33.41 area. That is also the break even stock price for this trade. This covered call has a 143 day duration, provides 13.47% downside protection and a 4.76% assigned return rate for a 12.15% 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 MFE Jan '11 25 Call and selling the Jun '10 35 call for a $9.35 debit. The trade has a 143 day life and would provide 11.03% downside protection and a 6.95% assigned return rate for an 18.00% annualized return rate (for comparison purposes only). McAfee does not pay dividends at this time. [WBA-Seven Summits Research]

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