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IAC InterActiveCorp (IACI) 2/9/10 PriceWatch Alert With 12.29% Downside Protection

Posted: Tuesday, February 09, 2010 8:32 AM EDT

IAC InterActiveCorp (NASDAQ: IACI) closed yesterday at $21.16. So far the stock has hit a 52-week low of $13.23 and 52-week high of $22.28. IAC InterActiveCorp stock has been showing support around 20.64 and resistance in the 21.60 range. Technical indicators for the stock are Bullish and S&P gives IACI a neutral 3 STAR (out of 5) hold rating. IACI appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jan '11 20 covered call for a net debit in the $18.56 area. That is also the break even stock price for this trade. This covered call has a 347 day duration, provides 12.29% downside protection and a 7.76% assigned return rate for an 8.16% 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 IACI Jan '11 15 Call and selling the Jan '11 20 call for a $4.45 debit. The trade has a 347 day life and would provide 8.08% downside protection and a 12.36% assigned return rate for a 13.00% annualized return rate (for comparison purposes only). IAC InterActiveCorp does not pay dividends at this time. [ATU-Seven Summits Research]

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