Knight Trading Group (NITE) 3/10/10 PriceWatch Alert At $13.95 Break Even

Posted: Wednesday, March 10, 2010 8:20 AM EDT
By: Market Intelligence Center Staff

Knight Trading Group (NASDAQ: NITE) closed yesterday at $16.70. So far the stock has hit a 52-week low of $13.39 and 52-week high of $23.11. Knight Trading Group stock has been showing support around 16.37 and resistance in the 17.15 range. Technical indicators for the stock are Bullish and S&P gives NITE a neutral 3 STAR (out of 5) hold rating. NITE appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '11 15 covered call for a net debit in the $13.95 area. That is also the break even stock price for this trade. This covered call has a 318 day duration, provides 16.47% downside protection and a 7.53% assigned return rate for an 8.64% 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 NITE Jan '11 12.50 Call and selling the Jan '11 15 call for a $2.05 debit. The trade has a 318 day life and would provide 12.87% downside protection and a 21.95% assigned return rate for a 25.00% annualized return rate (for comparison purposes only). Knight Trading Group does not pay dividends at this time. [WBA-Seven Summits Research]