Intercontinental Exchange (ICE) 10/29/09 PriceWatch Alert At $93.21 Break Even

Posted: Thursday, October 29, 2009 8:21 AM EDT
By: Market Intelligence Center Staff

Intercontinental Exchange (NYSE: ICE) closed yesterday at $100.61. So far the stock has hit a 52-week low of $49.69 and 52-week high of $121.93. Intercontinental Exchange stock has been showing support around 98.08 and resistance in the 105.48 range. Technical indicators for the stock are Bullish and S&P gives ICE a neutral 3 STAR (out of 5) hold rating. ICE appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Dec '09 100 covered call (IHH LT) for a net debit in the $93.21 area. That is also the break even stock price for this trade. This covered call has a 51 day duration, provides 7.36% downside protection and a 7.28% assigned return rate for a 52.14% 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 ICE Jan '11 30 Call (VWU AF) and selling the Dec '09 100 call (IHH LT) for a $65.30 debit. The trade has a 51 day life and would provide 5.28% downside protection and a 7.20% assigned return rate for a 52.00% annualized return rate (for comparison purposes only). Intercontinental Exchange does not pay dividends at this time. [THA-Seven Summits Research]