MEMC Electronic Materials (WFR) 2/9/10 PriceWatch Alert Up To 16.00% Return

Posted: Tuesday, February 09, 2010 8:47 AM EDT
By: Market Intelligence Center Staff

MEMC Electronic Materials (NYSE: WFR) closed yesterday at $12.13. So far the stock has hit a 52-week low of $11.50 and 52-week high of $21.36. MEMC Electronic Materials stock has been showing support around 11.70 and resistance in the 12.98 range. Technical indicators for the stock are Bearish 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 Jan '11 10 covered call for a net debit in the $8.68 area. That is also the break even stock price for this trade. This covered call has a 347 day duration, provides 28.44% downside protection and a 15.21% assigned return rate for a 16.00% 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 Jan '11 10 call for a $1.80 debit. The trade has a 347 day life and would provide 23.33% downside protection and a 38.89% assigned return rate for a 41.00% annualized return rate (for comparison purposes only). MEMC Electronic Materials does not pay dividends at this time. [ATU-Seven Summits Research]