Career Education (CECO) PriceWatch Alert With $18.30 Break Even

Posted: Tuesday, February 24, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

Career Education (NasdaqNM: CECO) closed yesterday at $24.80. So far the stock has hit a 52-week low of $11.57 and 52-week high of $25.40. Career Education stock has been showing support around 23.25 and resistance in the 26.17 range. Technical indicators for the stock are Bullish and S&P gives CECO a neutral 3 STAR (out of 5) hold 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 Jul '09 20 covered call (CUY GD) for a net debit in the $18.30 area. That is also the break even stock price for this trade. This covered call has a 144 day duration, provides 26.21% downside protection and a 9.29% assigned return rate for a 23.55% 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 10 Call (WIJ AB) and selling the Jul '09 20 call (CUY GD) for a $9.20 debit. The trade has a 144 day life and would provide 22.58% downside protection and an 8.70% assigned return rate for a 22.00% 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]