eBay Inc. (EBAY) Showing Bullish Technicals And Trading Near 52-Week High

Posted: Wednesday, November 25, 2009 8:55 AM EDT

eBay Inc. (NasdaqNM: EBAY) closed yesterday at $23.59. So far the stock has hit a 52-week low of $9.91 and 52-week high of $25.80. eBay stock has been showing support around 22.96 and resistance in the 24.04 range. Technical indicators for the stock are Bullish and S&P gives EBAY a positive 4 STAR (out of 5) buy rating. EBAY appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jul '10 24 covered call (QXB GE) for a net debit in the $21.15 area. That is also the break even stock price for this trade. This covered call has a 234 day duration, provides 10.34% downside protection and a 13.48% assigned return rate for a 21.02% 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 EBAY Jan '11 17.50 Call (OYI AW) and selling the Jul '10 24 call (QXB GE) for a $5.06 debit. The trade has a 234 day life and would provide 4.37% downside protection and a 28.46% assigned return rate for a 44.00% annualized return rate (for comparison purposes only). eBay does not pay dividends at this time. [WBA-Seven Summits Research]

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