Intuit (INTU) 11/2/09 PriceWatch Alert With $25.97 Break Even

Posted: Monday, November 02, 2009 8:35 AM EDT
By: Market Intelligence Center Staff

Intuit (NasdaqNM: INTU) ended the last trading session at $29.07. So far the stock has hit a 52-week low of $20.18 and 52-week high of $31.29. Intuit stock has been showing support around 28.62 and resistance in the 29.98 range. Technical indicators for the stock are Neutral and S&P gives INTU a neutral 3 STAR (out of 5) hold rating. INTU appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at an Apr '10 27.50 covered call (IQU DY) for a net debit in the $25.97 area. That is also the break even stock price for this trade. This covered call has a 166 day duration, provides 10.66% downside protection and a 5.89% assigned return rate for a 12.95% 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 INTU Jan '11 15 Call (OIU AC) and selling the Apr '10 27.50 call (IQU DY) for an $11.75 debit. The trade has a 166 day life and would provide 7.98% downside protection and a 6.38% assigned return rate for a 14.00% annualized return rate (for comparison purposes only). Intuit does not pay dividends at this time. [ABR-Seven Summits Research]