Netflix (NFLX) PriceWatch Alert At $32.68 Break Even

Posted: Monday, March 30, 2009 8:07 AM EDT

Netflix (NasdaqNM: NFLX) ended the last trading session at $39.68. So far the stock has hit a 52-week low of $17.90 and 52-week high of $44.42. Netflix stock has been showing support around 38.28 and resistance in the 41.94 range. Technical indicators for the stock are Bullish. NFLX appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jun '09 35 covered call (QNQ FG) for a net debit in the $32.68 area. That is also the break even stock price for this trade. This covered call has an 82 day duration, provides 17.64% downside protection and a 7.10% assigned return rate for a 31.60% 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 NFLX Jan '10 20 Call (WHU AD) and selling the Jun '09 35 call (QNQ FG) for a $13.90 debit. The trade has an 82 day life and would provide 14.57% downside protection and a 7.91% assigned return rate for a 35.00% annualized return rate (for comparison purposes only). Netflix 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]

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