Intuitive Surgical (ISRG) 3/15/10 PriceWatch Alert Targets 7.24% Downside Protection

Posted: Monday, March 15, 2010 8:31 AM EDT
By: Market Intelligence Center Staff

Intuitive Surgical (NASDAQ: ISRG) ended the last trading session at $358.90. So far the stock has hit a 52-week low of $91.52 and 52-week high of $367.00. Intuitive Surgical stock has been showing support around 352.45 and resistance in the 365.53 range. Technical indicators for the stock are Bullish and S&P gives ISRG a neutral 3 STAR (out of 5) hold rating. ISRG appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jul '10 360 covered call for a net debit in the $332.90 area. That is also the break even stock price for this trade. This covered call has a 124 day duration, provides 7.24% downside protection and an 8.14% assigned return rate for a 23.96% 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 ISRG Jan '11 250 Call and selling the Jul '10 360 call for a $93.25 debit. The trade has a 124 day life and would provide 4.36% downside protection and a 17.96% assigned return rate for a 53.00% annualized return rate (for comparison purposes only). Intuitive Surgical does not pay dividends at this time. [ABR-Seven Summits Research]