MGM Mirage (MGM) 3/15/10 PriceWatch Alert Support At Around $11.47

Posted: Monday, March 15, 2010 8:22 AM EDT
By: Market Intelligence Center Staff

MGM Mirage (NYSE: MGM) ended the last trading session at $11.80. So far the stock has hit a 52-week low of $2.28 and 52-week high of $14.25. MGM Mirage stock has been showing support around 11.47 and resistance in the 12.17 range. Technical indicators for the stock are Bullish and S&P gives MGM a neutral 3 STAR (out of 5) hold rating. MGM appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '11 10 covered call for a net debit in the $8.40 area. That is also the break even stock price for this trade. This covered call has a 313 day duration, provides 28.81% downside protection and a 19.05% assigned return rate for a 22.21% 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 MGM Jan '11 7.50 Call and selling the Jan '11 10 call for a $1.75 debit. The trade has a 313 day life and would provide 21.61% downside protection and a 42.86% assigned return rate for a 50.00% annualized return rate (for comparison purposes only). MGM Mirage does not pay dividends at this time. [ABR-Seven Summits Research]