MEMC Electronic Materials (WFR) 12/31/09 PriceWatch Alert Up To 19.73% Downside Protection

Posted: Thursday, December 31, 2009 8:15 AM EDT
By: Market Intelligence Center Staff

MEMC Electronic Materials (NYSE: WFR) closed yesterday at $13.43. So far the stock has hit a 52-week low of $11.32 and 52-week high of $21.36. MEMC Electronic Materials stock has been showing support around 12.83 and resistance in the 13.77 range. Technical indicators for the stock are Bullish and S&P gives WFR a very positive 5 STAR (out of 5) strong buy rating. WFR appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jul '10 12 covered call for a net debit in the $10.78 area. That is also the break even stock price for this trade. This covered call has a 198 day duration, provides 19.73% downside protection and an 11.32% assigned return rate for a 20.86% 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 WFR Jan '11 7.50 Call and selling the Jul '10 12 call for a $3.80 debit. The trade has a 198 day life and would provide 15.86% downside protection and an 18.42% assigned return rate for a 34.00% annualized return rate (for comparison purposes only). MEMC Electronic Materials does not pay dividends at this time. [THA-Seven Summits Research]