UBS (UBS) 10/22/09 PriceWatch Alert With $15.81 Break Even

Posted: Thursday, October 22, 2009 8:23 AM EDT
By: Market Intelligence Center Staff

UBS (NYSE: UBS) closed yesterday at $18.71. So far the stock has hit a 52-week low of $7.04 and 52-week high of $19.32. UBS stock has been showing support around 18.22 and resistance in the 19.42 range. Technical indicators for the stock are Bullish and S&P gives UBS a neutral 3 STAR (out of 5) hold rating. UBS appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Mar '10 17 covered call (UBS CQ) for a net debit in the $15.81 area. That is also the break even stock price for this trade. This covered call has a 149 day duration, provides 15.50% downside protection and a 7.53% assigned return rate for an 18.44% 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 UBS Jan '11 5 Call (ODX AA) and selling the Mar '10 17 call (UBS CQ) for an $11.30 debit. The trade has a 149 day life and would provide 12.88% downside protection and a 6.19% assigned return rate for a 15.00% annualized return rate (for comparison purposes only). UBS does not pay dividends at this time. [THA-Seven Summits Research]