Bankrate (RATE) PriceWatch Alert Shows Bullish Technicals

Posted: Wednesday, June 03, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

Bankrate (NasdaqNM: RATE) closed yesterday at $31.83. So far the stock has hit a 52-week low of $15.77 and 52-week high of $50.65. Bankrate stock has been showing support around 28.24 and resistance in the 33.66 range. Technical indicators for the stock are Bullish. RATE appears on the Investors Observer Stocks In The News list. Citigroup downgraded RATE Tuesday to Hold from Buy. For a hedged play on this stock, look at a Nov '09 30 covered call (QIB KF) for a net debit in the $27.03 area. That is also the break even stock price for this trade. This covered call has a 171 day duration, provides 15.08% downside protection and a 10.99% assigned return rate for a 23.45% 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 RATE Jan '10 22.50 Call (LVM AX) and selling the Nov '09 30 call (QIB KF) for a $5.65 debit. The trade has a 171 day life and would provide 11.56% downside protection and a 32.74% assigned return rate for a 70.00% annualized return rate (for comparison purposes only). Bankrate 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]