Urban Outfitters (URBN) 10/26/09 PriceWatch Alert With Support Around $31.84

Posted: Monday, October 26, 2009 8:19 AM EDT
By: Market Intelligence Center Staff

Urban Outfitters (NasdaqNM: URBN) ended the last trading session at $32.80. So far the stock has hit a 52-week low of $12.33 and 52-week high of $33.99. Urban Outfitters stock has been showing support around 31.84 and resistance in the 34.46 range. Technical indicators for the stock are Bullish and S&P gives URBN a positive 4 STAR (out of 5) buy rating. URBN appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Dec '09 31 covered call (HXW LE) for a net debit in the $29.70 area. That is also the break even stock price for this trade. This covered call has a 54 day duration, provides 9.45% downside protection and a 4.38% assigned return rate for a 29.59% 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 URBN Jan '11 10 Call (ZLL AB) and selling the Dec '09 31 call (HXW LE) for a $20.25 debit. The trade has a 54 day life and would provide 7.77% downside protection and a 3.70% assigned return rate for a 25.00% annualized return rate (for comparison purposes only). Urban Outfitters does not pay dividends at this time. [ABR-Seven Summits Research]