Biogen Idec (BIIB) 2/9/10 PriceWatch Alert Targets 8.33% Downside Protection

Posted: Tuesday, February 09, 2010 8:45 AM EDT
By: Market Intelligence Center Staff

Biogen Idec (NASDAQ: BIIB) closed yesterday at $52.84. So far the stock has hit a 52-week low of $41.75 and 52-week high of $55.37. Biogen Idec stock has been showing support around 51.87 and resistance in the 54.05 range. Technical indicators for the stock are Bullish and S&P gives BIIB a neutral 3 STAR (out of 5) hold rating. BIIB appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Apr '10 50 covered call for a net debit in the $48.44 area. That is also the break even stock price for this trade. This covered call has a 67 day duration, provides 8.33% downside protection and a 3.22% assigned return rate for a 17.54% 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 BIIB Jan '11 30 Call and selling the Apr '10 50 call for a $19.05 debit. The trade has a 67 day life and would provide 7.17% downside protection and a 4.99% assigned return rate for a 27.00% annualized return rate (for comparison purposes only). Biogen Idec does not pay dividends at this time. [ATU-Seven Summits Research]