Oracle (ORCL) PriceWatch Alert Targets 15.39% Return

Posted: Monday, June 29, 2009 8:07 AM EDT

Oracle (NasdaqNM: ORCL) ended the last trading session at $21.24. So far the stock has hit a 52-week low of $13.80 and 52-week high of $23.62. Oracle stock has been showing support around 20.92 and resistance in the 21.70 range. Technical indicators for the stock are Bullish and S&P gives ORCL a neutral 3 STAR (out of 5) hold rating. ORCL appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Dec '09 20 covered call (ORQ LD) for a net debit in the $18.64 area. That is also the break even stock price for this trade. This covered call has a 173 day duration, provides 12.24% downside protection and a 7.30% assigned return rate for a 15.39% 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 ORCL Jan '11 10 Call (VOC AB) and selling the Dec '09 20 call (ORQ LD) for an $8.95 debit. The trade has a 173 day life and would provide 10.78% downside protection and an 11.73% assigned return rate for a 25.00% annualized return rate (for comparison purposes only). Oracle has a current annual dividend yield of 0.94%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]

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