Google (GOOG) 10/29/09 PriceWatch Alert At $537.30 Break Even

Posted: Thursday, October 29, 2009 8:41 AM EDT

Google (NasdaqNM: GOOG) closed yesterday at $540.30. So far the stock has hit a 52-week low of $247.30 and 52-week high of $559.35. Google stock has been showing support around 531.10 and resistance in the 554.60 range. Technical indicators for the stock are Bullish and S&P gives GOOG a neutral 3 STAR (out of 5) hold rating. GOOG appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Dec '09 600 covered call (GOP LA) for a net debit in the $537.30 area. That is also the break even stock price for this trade. This covered call has a 51 day duration, provides 0.56% downside protection and an 11.67% assigned return rate for an 83.52% 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 GOOG Jan '11 370 Call (OZF AO) and selling the Dec '09 600 call (GOP LA) for an $186.00 debit. The trade has a 51 day life and would provide no downside protection and a 23.66% assigned return rate for a 169.00% annualized return rate (for comparison purposes only). Google does not pay dividends at this time. [THA-Seven Summits Research]

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