Digital River (DRIV) PriceWatch Alert Support Down To $19.37

Posted: Monday, January 26, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

Digital River (NasdaqNM: DRIV) closed yesterday at $20.27. So far the stock has hit a 52-week low of $16.88 and 52-week high of $45.45. Digital River stock has been showing support around 19.37 and resistance in the 21.91 range. Technical indicators for the stock are Bearish. DRIV appears on the Investors Observer Stocks In The News list. DRIV lost $2.25 (-9.99%) Friday after being downgraded at Oppenheimer to "Underperform" from "Perform." For a hedged play on this stock, look at a Jan '10 15 covered call (YKG AC) for a net debit in the $12.97 area. That is also the break even stock price for this trade. This covered call has a 355 day duration, provides 36.01% downside protection and a 15.65% assigned return rate for a 16.09% 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 DRIV Jan '10 10 Call (YKG AB) and selling the Jan '10 15 call (YKG AC) for a $4.55 debit. The trade has a 355 day life and would provide 28.22% downside protection and a 9.89% assigned return rate for a 10.00% annualized return rate (for comparison purposes only). Digital River 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]