Amgen (AMGN) 11/2/09 PriceWatch Alert Up To 5.04% Downside Protection

Posted: Monday, November 02, 2009 8:11 AM EDT

Amgen (NasdaqNM: AMGN) ended the last trading session at $53.62. So far the stock has hit a 52-week low of $44.96 and 52-week high of $64.76. Amgen stock has been showing support around 51.86 and resistance in the 55.72 range. Technical indicators for the stock are Bearish and S&P gives AMGN a positive 4 STAR (out of 5) buy rating. AMGN appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at an Apr '10 60 covered call (YAA DL) for a net debit in the $50.92 area. That is also the break even stock price for this trade. This covered call has a 166 day duration, provides 5.04% downside protection and a 17.83% assigned return rate for a 39.21% 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 AMGN Jan '11 40 Call (VAM AH) and selling the Apr '10 60 call (YAA DL) for a $14.10 debit. The trade has a 166 day life and would provide no downside protection and a 41.84% assigned return rate for a 92.00% annualized return rate (for comparison purposes only). Amgen does not pay dividends at this time. [ABR-Seven Summits Research]

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