SAP AG (SAP) PriceWatch Alert Up To 25.28% Return

Posted: Monday, June 08, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

SAP AG (NYSE: SAP) ended the last trading session at $42.27. So far the stock has hit a 52-week low of $29.31 and 52-week high of $59.42. SAP AG stock has been showing support around 41.52 and resistance in the 43.26 range. Technical indicators for the stock are Bullish and S&P gives SAP a positive 4 STAR (out of 5) buy rating. SAP appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Sep '09 41 covered call (SAP IP) for a net debit in the $38.27 area. That is also the break even stock price for this trade. This covered call has a 103 day duration, provides 9.46% downside protection and a 7.13% assigned return rate for a 25.28% 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 SAP Jan '10 30 Call (WTA AF) and selling the Sep '09 41 call (SAP IP) for a $9.40 debit. The trade has a 103 day life and would provide 6.79% downside protection and a 17.02% assigned return rate for a 60.00% annualized return rate (for comparison purposes only). SAP AG has a current annual dividend yield of 1.13%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]