Mastercard (MA) PriceWatch Alert Targets 35.78% Return

Posted: Tuesday, June 30, 2009 8:07 AM EDT

Mastercard (NYSE: MA) closed yesterday at $168.15. So far the stock has hit a 52-week low of $113.05 and 52-week high of $290.96. Mastercard stock has been showing support around 163.74 and resistance in the 171.70 range. Technical indicators for the stock are Bullish 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 '09 165 covered call (MAL HM) for a net debit in the $156.85 area. That is also the break even stock price for this trade. This covered call has a 53 day duration, provides 6.72% downside protection and a 5.20% assigned return rate for a 35.78% 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 '09 165 call (MAL HM) for a $97.90 debit. The trade has a 53 day life and would provide 6.10% downside protection and a 7.25% assigned return rate for a 50.00% annualized return rate (for comparison purposes only). Mastercard has a current annual dividend yield of 0.37%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]

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