Intel (INTC) PriceWatch Alert With 12.85% Downside Protection

Posted: Thursday, July 02, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

Intel (NasdaqNM: INTC) closed yesterday at $17.04. So far the stock has hit a 52-week low of $12.05 and 52-week high of $24.75. Intel stock has been showing support around 16.37 and resistance in the 17.65 range. Technical indicators for the stock are Bullish and S&P gives INTC a positive 4 STAR (out of 5) buy rating. INTC appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jan '10 16 covered call (NQ AQ) for a net debit in the $14.85 area. That is also the break even stock price for this trade. This covered call has a 198 day duration, provides 12.85% downside protection and a 7.74% assigned return rate for a 14.28% 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 INTC Jan '11 10 Call (VNL AB) and selling the Jan '10 16 call (NQ AQ) for a $5.11 debit. The trade has a 198 day life and would provide 11.33% downside protection and a 17.42% assigned return rate for a 32.00% annualized return rate (for comparison purposes only). Intel has a current annual dividend yield of 3.42%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]