Novellus Systems (NVLS) 10/23/09 PriceWatch Alert Up To 21.06% Return

Posted: Friday, October 23, 2009 8:35 AM EDT
By: Market Intelligence Center Staff

Novellus Systems (NasdaqNM: NVLS) closed yesterday at $23.08. So far the stock has hit a 52-week low of $10.26 and 52-week high of $23.13. Novellus Systems stock has been showing support around 20.73 and resistance in the 24.31 range. Technical indicators for the stock are Bullish and S&P gives NVLS a positive 4 STAR (out of 5) buy rating. NVLS appears on the Investors Observer Stocks In The News list. NVLS reported a third-quarter loss of 3 cents per share Thursday morning, better than the 4-cent loss that analysts had been expecting to see. For a hedged play on this stock, look at a Mar '10 22.50 covered call (NLQ CX) for a net debit in the $20.73 area. That is also the break even stock price for this trade. This covered call has a 148 day duration, provides 10.18% downside protection and an 8.54% assigned return rate for a 21.06% 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 NVLS Jan '11 10 Call (OTN AB) and selling the Mar '10 22.50 call (NLQ CX) for a $10.70 debit. The trade has a 148 day life and would provide 10.31% downside protection and a 16.82% assigned return rate for a 41.00% annualized return rate (for comparison purposes only). Novellus Systems does not pay dividends at this time. [FBB-Seven Summits Research]