Sybase (SY) PriceWatch Alert At $28.81 Break Even

Posted: Tuesday, May 05, 2009 8:07 AM EDT

Sybase (NYSE: SY) closed yesterday at $33.81. So far the stock has hit a 52-week low of $22.20 and 52-week high of $36.99. Sybase stock has been showing support around 33.24 and resistance in the 34.24 range. Technical indicators for the stock are Bullish and S&P gives SY a positive 4 STAR (out of 5) buy rating. SY appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Sep '09 30 covered call (SY IF) for a net debit in the $28.81 area. That is also the break even stock price for this trade. This covered call has a 137 day duration, provides 14.79% downside protection and a 4.13% assigned return rate for an 11.00% 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 SY Jan '10 10 Call (WYB AB) and selling the Sep '09 30 call (SY IF) for a $19.05 debit. The trade has a 137 day life and would provide 14.08% downside protection and a 4.99% assigned return rate for a 13.00% annualized return rate (for comparison purposes only). Sybase 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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