Motorola (MOT) PriceWatch Alert Targets 20.11% Return

Posted on Friday, August 29, 2008 8:07 AM

Motorola (NYSE: MOT) closed yesterday at $9.57. So far the stock has hit a 52-week low of $6.62 and 52-week high of $19.68. Motorola stock has been showing support around 9.37 and resistance in the 9.77 range. Technical indicators for the stock are Bullish and S&P gives MOT a neutral 3 STAR (out of 5) hold rating. MOT appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at an Apr '09 9 covered call (MOT DL) for a net debit in the $7.98 area. That is also the break even stock price for this trade. This covered call has a 232 day duration, provides 16.61% downside protection and a 12.78% assigned return rate for a 20.11% 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 MOT Jan '10 5 Call (WMA AA) and selling the Apr '09 9 call (MOT DL) for a $3.31 debit. The trade has a 232 day life and would provide 13.17% downside protection and a 20.85% assigned return rate for a 33.00% annualized return rate (for comparison purposes only). Motorola has a current annual dividend yield of 2.09%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]