Amazon.com, Inc. (AMZN) 2/9/10 PriceWatch Alert Support Down To $113.69

Posted: Tuesday, February 09, 2010 8:28 AM EDT
By: Market Intelligence Center Staff

Amazon.com, Inc. (NASDAQ: AMZN) closed yesterday at $116.83. So far the stock has hit a 52-week low of $59.82 and 52-week high of $145.91. Amazon stock has been showing support around 113.69 and resistance in the 122.57 range. Technical indicators for the stock are Bearish and S&P gives AMZN a neutral 3 STAR (out of 5) hold rating. AMZN appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at an Apr '10 120 covered call for a net debit in the $110.13 area. That is also the break even stock price for this trade. This covered call has a 67 day duration, provides 5.73% downside protection and an 8.96% assigned return rate for a 48.82% 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 AMZN Jan '11 65 Call and selling the Apr '10 120 call for a $47.75 debit. The trade has a 67 day life and would provide 3.49% downside protection and a 15.18% assigned return rate for an 83.00% annualized return rate (for comparison purposes only). Amazon does not pay dividends at this time. [ATU-Seven Summits Research]