Oracle (ORCL) 3/12/10 PriceWatch Alert With 9.71% Downside Protection

Posted: Friday, March 12, 2010 8:03 AM EDT
By: Market Intelligence Center Staff

Oracle (NASDAQ: ORCL) closed yesterday at $25.14. So far the stock has hit a 52-week low of $14.65 and 52-week high of $25.64. Oracle stock has been showing support around 24.61 and resistance in the 25.51 range. Technical indicators for the stock are Bullish and S&P gives ORCL a positive 4 STAR (out of 5) buy rating. ORCL appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Sep '10 24 covered call for a net debit in the $22.70 area. That is also the break even stock price for this trade. This covered call has a 190 day duration, provides 9.71% downside protection and a 5.73% assigned return rate for an 11.00% 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 ORCL Jan '11 17.50 Call and selling the Sep '10 24 call for a $5.51 debit. The trade has a 190 day life and would provide 8.47% downside protection and a 17.97% assigned return rate for a 35.00% annualized return rate (for comparison purposes only). Oracle has a current annual dividend yield of 0.81%. [FBB-Seven Summits Research]