TD Ameritrade (AMTD) NewsBite

Posted on Tuesday, May 13, 2008 9:01 AM

TD Ameritrade (NasdaqNM: AMTD) closed yesterday at $18.24. So far the stock has hit a 52-week low of $13.82 and 52-week high of $21.31. TD Ameritrade stock has been showing support around 17.79 and resistance in the 18.47 range. Technical indicators for the stock are Bullish and S&P gives AMTD a neutral 3 STAR (out of 5) hold rating. For a hedged play on this stock, look at an Aug '08 17.50 covered call (TQA HW) for a net debit in the $16.54 area. That is also the break even stock price for this trade. This covered call has a 95 day duration, provides 9.32% downside protection and a 5.80% assigned return rate for a 22.30% 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 AMTD Jan '09 10 Call (VCY AB) and selling the Aug '08 17.50 call (TQA HW) for a $6.95 debit. The trade has a 95 day life and would provide 7.07% downside protection and a 7.91% assigned return rate for a 30.00% annualized return rate (for comparison purposes only). TD Ameritrade does not pay dividends at this time. [IHF - Investors Observer]