Activision (ATVI) 12/31/09 PriceWatch Alert With Support Around $11.14

Posted: Thursday, December 31, 2009 8:19 AM EDT
By: Market Intelligence Center Staff

Activision (NASDAQ: ATVI) closed yesterday at $11.39. So far the stock has hit a 52-week low of $8.14 and 52-week high of $13.14. Activision stock has been showing support around 11.14 and resistance in the 11.54 range. Technical indicators for the stock are Bullish and S&P gives ATVI a very positive 5 STAR (out of 5) strong buy rating. ATVI appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Aug '10 11 covered call for a net debit in the $9.99 area. That is also the break even stock price for this trade. This covered call has a 233 day duration, provides 12.29% downside protection and a 10.11% assigned return rate for a 15.84% 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 ATVI Jan '11 7.50 Call and selling the Aug '10 11 call for a $2.95 debit. The trade has a 233 day life and would provide 8.25% downside protection and an 18.64% assigned return rate for a 29.00% annualized return rate (for comparison purposes only). Activision does not pay dividends at this time. [THA-Seven Summits Research]