Mastercard (MA) PriceWatch Alert Technicals Showing Bearish

Posted: Thursday, June 25, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

Mastercard (NYSE: MA) closed yesterday at $161.06. So far the stock has hit a 52-week low of $113.05 and 52-week high of $295.16. Mastercard stock has been showing support around 158.29 and resistance in the 163.97 range. Technical indicators for the stock are Bearish and S&P gives MA a very positive 5 STAR (out of 5) strong buy rating. MA appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Aug '09 160 covered call (MAL HL) for a net debit in the $149.66 area. That is also the break even stock price for this trade. This covered call has a 58 day duration, provides 7.08% downside protection and a 6.91% assigned return rate for a 43.48% 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 MA Jan '11 60 Call (ZUE AE) and selling the Aug '09 160 call (MAL HL) for a $91.30 debit. The trade has a 58 day life and would provide 6.06% downside protection and a 9.53% assigned return rate for a 60.00% annualized return rate (for comparison purposes only). Mastercard has a current annual dividend yield of 0.38%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]