Career Education (CECO) PriceWatch Alert Down To $16.62 Break Even

Posted: Monday, February 23, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

Career Education (NasdaqNM: CECO) ended the last trading session at $23.62. So far the stock has hit a 52-week low of $11.57 and 52-week high of $23.90. Career Education stock has been showing support around 18.79 and resistance in the 26.31 range. Technical indicators for the stock are Bullish and S&P gives CECO a weak 2 STAR (out of 5) sell rating. CECO appears on the Investors Observer Stocks In The News list. CECO bounced $3.96 (20.14%) Friday after the company posted a fourth-quarter profit of $31.2 million, or 35 cents per share, easily beating analysts' projections of 20 cents per share. For a hedged play on this stock, look at a Jan '10 20 covered call (WIJ AD) for a net debit in the $16.62 area. That is also the break even stock price for this trade. This covered call has a 327 day duration, provides 29.64% downside protection and a 20.34% assigned return rate for a 22.70% 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 CECO Jan '10 15 Call (WIJ AC) and selling the Jan '10 20 call (WIJ AD) for a $3.50 debit. The trade has a 327 day life and would provide 21.68% downside protection and a 42.86% assigned return rate for a 48.00% annualized return rate (for comparison purposes only). Career Education 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]