Sigma Designs (SIGM) PriceWatch Alert Support At Around $14.88

Posted on Tuesday, September 02, 2008 8:07 AM

Sigma Designs (NGM: SIGM) closed yesterday at $17.13. So far the stock has hit a 52-week low of $13.57 and 52-week high of $73.00. Sigma Designs stock has been showing support around 14.88 and resistance in the 19.02 range. Technical indicators for the stock are Bearish. SIGM appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Jan '09 15 covered call (MQN AC) for a net debit in the $13.93 area. That is also the break even stock price for this trade. This covered call has a 137 day duration, provides 18.68% downside protection and a 7.68% assigned return rate for a 20.46% 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 SIGM Jan '10 7.50 Call (LMB AY) and selling the Jan '09 15 call (MQN AC) for a $6.90 debit. The trade has a 137 day life and would provide 15.94% downside protection and an 8.70% assigned return rate for a 23.00% annualized return rate (for comparison purposes only). Sigma Designs 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]