Yahoo (YHOO) 9/17/09 PriceWatch Alert With Support Around $16.28

Posted: Thursday, September 17, 2009 8:32 AM EDT
By: Market Intelligence Center Staff

Yahoo (NasdaqNM: YHOO) closed yesterday at $16.99. So far the stock has hit a 52-week low of $8.94 and 52-week high of $20.82. Yahoo stock has been showing support around 16.28 and resistance in the 17.46 range. Technical indicators for the stock are Bullish and S&P gives YHOO a positive 4 STAR (out of 5) buy rating. YHOO appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at an Apr '10 17 covered call (YHQ DR) for a net debit in the $15.05 area. That is also the break even stock price for this trade. This covered call has a 212 day duration, provides 11.42% downside protection and a 12.96% assigned return rate for a 22.31% 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 YHOO Jan '11 10 Call (VYH AB) and selling the Apr '10 17 call (YHQ DR) for a $5.76 debit. The trade has a 212 day life and would provide 7.24% downside protection and a 21.53% assigned return rate for a 37.00% annualized return rate (for comparison purposes only). Yahoo does not pay dividends at this time. [THA-Seven Summits Research] For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo