Macrovision (MVSN) PriceWatch Alert With 24.54% Downside Protection

Posted: Thursday, February 12, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

Macrovision (NasdaqNM: MVSN) closed yesterday at $14.26. So far the stock has hit a 52-week low of $8.46 and 52-week high of $18.62. Macrovision stock has been showing support around 13.01 and resistance in the 16.23 range. Technical indicators for the stock are Bullish. MVSN appears on the Investors Observer Stocks In The News list. MVSN rose $0.92 (6.90%) Wednesday after the company reported fourth-quarter adjusted earnings of $52.7 million, or 52 cents per share, on revenue of $118.2 million, beating analysts' estimates of 21 cents per share on revenue of $111.1 million. For a hedged play on this stock, look at a Jan '10 12.50 covered call (YVG AV) for a net debit in the $10.76 area. That is also the break even stock price for this trade. This covered call has a 338 day duration, provides 24.54% downside protection and a 16.17% assigned return rate for a 17.46% 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 MVSN Jan '10 7.50 Call (YVG AU) and selling the Jan '10 12.50 call (YVG AV) for a $4.10 debit. The trade has a 338 day life and would provide 18.65% downside protection and a 21.95% assigned return rate for a 24.00% annualized return rate (for comparison purposes only). Macrovision 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]