BMC Software (BMC) 2/9/10 PriceWatch Alert Targets 18.49% Return

Posted: Tuesday, February 09, 2010 8:41 AM EDT
By: Market Intelligence Center Staff

BMC Software (NASDAQ: BMC) closed yesterday at $35.93. So far the stock has hit a 52-week low of $27.96 and 52-week high of $40.87. BMC Software stock has been showing support around 35.64 and resistance in the 36.50 range. Technical indicators for the stock are Bearish and S&P gives BMC a neutral 3 STAR (out of 5) hold rating. BMC appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a May '10 35 covered call for a net debit in the $33.28 area. That is also the break even stock price for this trade. This covered call has a 102 day duration, provides 7.38% downside protection and a 5.17% assigned return rate for an 18.49% 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 BMC Jan '11 20 Call and selling the May '10 35 call for a $14.10 debit. The trade has a 102 day life and would provide 5.09% downside protection and a 6.38% assigned return rate for a 23.00% annualized return rate (for comparison purposes only). BMC Software does not pay dividends at this time. [ATU-Seven Summits Research]