EMC (EMC) Could Be On The Move

Posted: Thursday, September 02, 2010 9:05 AM EDT
By: Market Intelligence Center Staff

EMC (NYSE: EMC) closed yesterday at $19.15. So far the stock has hit a 52-week low of $15.39 and 52-week high of $20.97. EMC stock has been showing support around 18.11 and resistance in the 19.75 range. Technical indicators for the stock are Bullish and S&P gives EMC a very positive 5 STAR (out of 5) strong buy rating. EMC appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Apr '11 20 covered call for a net debit in the $17.70 area. That is also the break even stock price for this trade. This covered call has a 226 day duration, provides 7.57% downside protection and a 12.99% assigned return rate for a 20.99% 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 EMC Jan '12 12.50 Call and selling the Apr '11 20 call for a $6.05 debit. The trade has a 226 day life and would provide 3.13% downside protection and a 23.97% assigned return rate for a 39.00% annualized return rate (for comparison purposes only). EMC does not pay dividends at this time. [THA-Seven Summits Research]