Dell (DELL) PriceWatch Alert Down To $22.00 Break Even

Posted on Monday, June 16, 2008 8:07 AM

Dell (NasdaqNM: DELL) ended the last trading session at $24.42. So far the stock has hit a 52-week low of $18.13 and 52-week high of $30.77. Dell stock has been showing support around 23.45 and resistance in the 25.05 range. Technical indicators for the stock are Bullish and S&P gives DELL a positive 4 STAR (out of 5) buy rating. DELL appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jan '09 25 covered call (VPZ AE) for a net debit in the $22.00 area. That is also the break even stock price for this trade. This covered call has a 215 day duration, provides 9.91% downside protection and a 13.64% assigned return rate for a 23.15% 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 DELL Jan '09 22.50 Call (VPZ AX) and selling the Jan '09 25 call (VPZ AE) for a $1.48 debit. The trade has a 215 day life and would provide 1.80% downside protection and a 68.92% assigned return rate for an 117.00% annualized return rate (for comparison purposes only). Dell 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]