Motorola (MOT) 9/18/09 PriceWatch Alert Could Hit 21.65% Return

Posted: Friday, September 18, 2009 8:12 AM EDT

Motorola (NYSE: MOT) closed yesterday at $8.91. So far the stock has hit a 52-week low of $2.98 and 52-week high of $9.45. Motorola stock has been showing support around 8.64 and resistance in the 9.34 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 $7.11 area. That is also the break even stock price for this trade. This covered call has a 211 day duration, provides 20.20% downside protection and a 12.52% assigned return rate for a 21.65% 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 $2.65 debit. The trade has a 211 day life and would provide 14.14% downside protection and a 13.21% assigned return rate for a 23.00% annualized return rate (for comparison purposes only). Motorola does not pay dividends at this time. [FBB-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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