KLA Tencor (KLAC) PriceWatch Alert Down To $30.18 Break Even

Posted on Monday, September 08, 2008 8:07 AM

KLA Tencor (NasdaqNM: KLAC) ended the last trading session at $33.78. So far the stock has hit a 52-week low of $33.15 and 52-week high of $58.97. KLA Tencor stock has been showing support around 32.51 and resistance in the 35.05 range. Technical indicators for the stock are Bearish and S&P gives KLAC a positive 4 STAR (out of 5) buy rating. KLAC appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Dec '08 32.50 covered call (KCQ LW) for a net debit in the $30.18 area. That is also the break even stock price for this trade. This covered call has a 103 day duration, provides 10.66% downside protection and a 7.69% assigned return rate for a 27.24% 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 KLAC Jan '10 20 Call (WPQ AD) and selling the Dec '08 32.50 call (KCQ LW) for an $11.75 debit. The trade has a 103 day life and would provide 6.01% downside protection and a 6.38% assigned return rate for a 23.00% annualized return rate (for comparison purposes only). KLA Tencor has a current annual dividend yield of 1.65%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]