National Semiconductor (NSM) PriceWatch Alert Up To 15.98% Return

Posted on Tuesday, July 08, 2008 8:07 AM

National Semiconductor (NYSE: NSM) closed yesterday at $20.21. So far the stock has hit a 52-week low of $16.21 and 52-week high of $29.34. National Semiconductor stock has been showing support around 19.34 and resistance in the 21.34 range. Technical indicators for the stock are Bearish and S&P gives NSM a positive 4 STAR (out of 5) buy rating. NSM appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Nov '08 17.50 covered call (NSM KW) for a net debit in the $16.51 area. That is also the break even stock price for this trade. This covered call has a 137 day duration, provides 18.31% downside protection and a 6.00% assigned return rate for a 15.98% 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 NSM Jan '09 10 Call (NSM AB) and selling the Nov '08 17.50 call (NSM KW) for a $6.85 debit. The trade has a 137 day life and would provide 16.63% downside protection and a 9.49% assigned return rate for a 25.00% annualized return rate (for comparison purposes only). National Semiconductor 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]