Expedia (EXPE) 2/9/10 PriceWatch Alert Down To $18.42 Break Even

Posted: Tuesday, February 09, 2010 8:43 AM EDT
By: Market Intelligence Center Staff

Expedia (NASDAQ: EXPE) closed yesterday at $21.42. So far the stock has hit a 52-week low of $6.31 and 52-week high of $27.51. Expedia stock has been showing support around 20.79 and resistance in the 22.21 range. Technical indicators for the stock are Bearish and S&P gives EXPE a neutral 3 STAR (out of 5) hold rating. EXPE appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jul '10 20 covered call for a net debit in the $18.42 area. That is also the break even stock price for this trade. This covered call has a 158 day duration, provides 14.01% downside protection and an 8.58% assigned return rate for a 19.82% 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 EXPE Jan '11 10 Call and selling the Jul '10 20 call for an $8.90 debit. The trade has a 158 day life and would provide 11.76% downside protection and a 12.36% assigned return rate for a 29.00% annualized return rate (for comparison purposes only). Expedia does not pay dividends at this time. [ATU-Seven Summits Research]