UAL (UAUA) 3/17/10 PriceWatch Alert With $12.58 Break Even

Posted: Wednesday, March 17, 2010 8:39 AM EDT
By: Market Intelligence Center Staff

UAL (NASDAQ: UAUA) closed yesterday at $20.18. So far the stock has hit a 52-week low of $3.07 and 52-week high of $20.45. UAL stock has been showing support around 19.53 and resistance in the 20.77 range. Technical indicators for the stock are Bullish and S&P gives UAUA a neutral 3 STAR (out of 5) hold rating. UAUA 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 $12.58 area. That is also the break even stock price for this trade. This covered call has a 311 day duration, provides 37.66% downside protection and a 19.24% assigned return rate for a 22.58% 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 UAUA Jan '11 12.50 Call and selling the Jan '11 15 call for a $1.85 debit. The trade has a 311 day life and would provide 28.89% downside protection and a 35.14% assigned return rate for a 41.00% annualized return rate (for comparison purposes only). UAL does not pay dividends at this time. [WBA-Seven Summits Research]