UAL (UAUA) 2/9/10 PriceWatch Alert With $6.32 Break Even

Posted: Tuesday, February 09, 2010 8:34 AM EDT
By: Market Intelligence Center Staff

UAL (NASDAQ: UAUA) closed yesterday at $13.07. So far the stock has hit a 52-week low of $3.07 and 52-week high of $14.15. UAL stock has been showing support around 12.30 and resistance in the 13.72 range. Technical indicators for the stock are Bullish and S&P gives UAUA a neutral 3 STAR (out of 5) hold rating. UAUA appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '11 7.50 covered call for a net debit in the $6.32 area. That is also the break even stock price for this trade. This covered call has a 347 day duration, provides 51.64% downside protection and an 18.67% assigned return rate for a 19.64% 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 UAUA Jan '11 5 Call and selling the Jan '11 7.50 call for a $1.95 debit. The trade has a 347 day life and would provide 46.82% downside protection and a 28.21% assigned return rate for a 30.00% annualized return rate (for comparison purposes only). UAL does not pay dividends at this time. [ATU-Seven Summits Research]