Amazon.com, Inc. (AMZN) PriceWatch Alert At $69.28 Break Even

Posted on Thursday, June 12, 2008 8:07 AM

Amazon.com, Inc. (NasdaqNM: AMZN) closed yesterday at $77.28. So far the stock has hit a 52-week low of $61.20 and 52-week high of $101.09. Amazon stock has been showing support around 75.13 and resistance in the 81.07 range. Technical indicators for the stock are Bullish and S&P gives AMZN a neutral 3 STAR (out of 5) hold rating. AMZN appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at an Oct '08 80 covered call (ZQN JP) for a net debit in the $69.28 area. That is also the break even stock price for this trade. This covered call has a 128 day duration, provides 10.35% downside protection and a 15.47% assigned return rate for a 44.12% 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 AMZN Jan '09 60 Call (ZQN AL) and selling the Oct '08 80 call (ZQN JP) for a $14.65 debit. The trade has a 128 day life and would provide 3.40% downside protection and a 36.52% assigned return rate for a 104.00% annualized return rate (for comparison purposes only). Amazon does not pay dividends at this time. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]