Mylan Laboratories (MYL) 7/30/10 PriceWatch Alert Targets 21.73% Return

Posted: Friday, July 30, 2010 8:47 AM EDT
By: Market Intelligence Center Staff

Mylan Laboratories (NASDAQ: MYL) closed yesterday at $17.49. So far the stock has hit a 52-week low of $12.91 and 52-week high of $23.63. Mylan Laboratories stock has been showing support around 16.67 and resistance in the 18.67 range. Technical indicators for the stock are Bearish and S&P gives MYL a very positive 5 STAR (out of 5) strong buy rating. MYL appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '11 17.50 covered call for a net debit in the $15.84 area. That is also the break even stock price for this trade. This covered call has a 176 day duration, provides 9.43% downside protection and a 10.48% assigned return rate for a 21.73% 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 MYL Jan '12 10 Call and selling the Jan '11 17.50 call for a $6.75 debit. The trade has a 176 day life and would provide 4.23% downside protection and an 11.11% assigned return rate for a 23.00% annualized return rate (for comparison purposes only). Mylan Laboratories does not pay dividends at this time. [FBB-Seven Summits Research]