Shanda Ineractive Entertainment (SNDA) PriceWatch Alert Targets 29.26% Downside Protection
Posted on Tuesday, July 15, 2008 8:07 AM
Shanda Ineractive Entertainment (NasdaqNM: SNDA) closed yesterday at $22.56. So far the stock has hit a 52-week low of $21.80 and 52-week high of $40.71. Shanda Ineractive Entertainment stock has been showing support around 21.28 and resistance in the 24.90 range. Technical indicators for the stock are Bearish and S&P gives SNDA a very positive 5 STAR (out of 5) strong buy rating. SNDA appears on the Investors Observer Stocks In The News list. SNDA fell $0.17 (-0.75%) Monday after a Citigroup analyst raised his rating on the stock to "Buy" from "Hold." For a hedged play on this stock, look at a Jan '09 17.50 covered call (QKU AW) for a net debit in the $15.96 area. That is also the break even stock price for this trade. This covered call has an 186 day duration, provides 29.26% downside protection and a 9.65% assigned return rate for an 18.94% 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 SNDA Jan '09 12.50 Call (QKU AV) and selling the Jan '09 17.50 call (QKU AW) for a $4.10 debit. The trade has an 186 day life and would provide 26.42% downside protection and a 21.95% assigned return rate for a 43.00% annualized return rate (for comparison purposes only). Shanda Ineractive Entertainment 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]