Amylin Pharmaceuticals (AMLN) 10/15/09 PriceWatch Alert Up To 20.82% Return

Posted: Thursday, October 15, 2009 8:44 AM EDT
By: Market Intelligence Center Staff

Amylin Pharmaceuticals (NasdaqNM: AMLN) closed yesterday at $13.95. So far the stock has hit a 52-week low of $5.50 and 52-week high of $15.90. Amylin Pharmaceuticals stock has been showing support around 13.59 and resistance in the 14.41 range. Technical indicators for the stock are Bullish and S&P gives AMLN a neutral 3 STAR (out of 5) hold rating. AMLN appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Apr '10 10 covered call (AQM DB) for a net debit in the $9.05 area. That is also the break even stock price for this trade. This covered call has an 184 day duration, provides 35.13% downside protection and a 10.50% assigned return rate for a 20.82% 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 AMLN Jan '11 5 Call (OGA AA) and selling the Apr '10 10 call (AQM DB) for a $4.70 debit. The trade has an 184 day life and would provide 30.47% downside protection and a 6.38% assigned return rate for a 13.00% annualized return rate (for comparison purposes only). Amylin Pharmaceuticals does not pay dividends at this time. [THA-Seven Summits Research]