SAP AG (SAP) PriceWatch Alert Support At Around $50.33

Posted on Monday, July 14, 2008 8:07 AM

SAP AG (NYSE: SAP) ended the last trading session at $51.88. So far the stock has hit a 52-week low of $43.00 and 52-week high of $59.86. SAP AG stock has been showing support around 50.33 and resistance in the 52.77 range. Technical indicators for the stock are Bearish and S&P gives SAP a neutral 3 STAR (out of 5) hold rating. SAP appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Sep '08 50 covered call (SAP IJ) for a net debit in the $48.08 area. That is also the break even stock price for this trade. This covered call has a 68 day duration, provides 7.32% downside protection and a 3.99% assigned return rate for a 21.43% 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 SAP Jan '09 40 Call (VSP AH) and selling the Sep '08 50 call (SAP IJ) for a $9.30 debit. The trade has a 68 day life and would provide 4.97% downside protection and a 7.53% assigned return rate for a 40.00% annualized return rate (for comparison purposes only). SAP AG 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]