Motorola (MOT) 9/15/09 PriceWatch Alert Up To 22.16% Return

Posted: Tuesday, September 15, 2009 8:24 AM EDT

Motorola (NYSE: MOT) closed yesterday at $8.79. So far the stock has hit a 52-week low of $2.98 and 52-week high of $9.02. Motorola stock has been showing support around 8.44 and resistance in the 9.20 range. Technical indicators for the stock are Bullish and S&P gives MOT a neutral 3 STAR (out of 5) hold rating. MOT appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Apr '10 8 covered call (MOT DK) for a net debit in the $7.08 area. That is also the break even stock price for this trade. This covered call has a 214 day duration, provides 19.45% downside protection and a 12.99% assigned return rate for a 22.16% 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 MOT Jan '11 5 Call (VMA AA) and selling the Apr '10 8 call (MOT DK) for a $2.59 debit. The trade has a 214 day life and would provide 13.65% downside protection and a 15.83% assigned return rate for a 27.00% annualized return rate (for comparison purposes only). Motorola does not pay dividends at this time. [ATU-Seven Summits Research] For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo

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