UBS (UBS) PriceWatch Alert for October 23, 2009

Posted: Friday, October 23, 2009 8:41 AM EDT

UBS (NYSE: UBS) closed yesterday at $18.91. 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 18.19 and resistance in the 19.33 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 $15.96 area. That is also the break even stock price for this trade. This covered call has a 148 day duration, provides 15.60% downside protection and a 6.52% assigned return rate for a 16.07% 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 $11.40 debit. The trade has a 148 day life and would provide 13.27% downside protection and a 5.26% assigned return rate for a 13.00% annualized return rate (for comparison purposes only). UBS does not pay dividends at this time. [FBB-Seven Summits Research]

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