Urban Outfitters (URBN) 11/2/09 PriceWatch Alert Support At Around $30.33

Posted: Monday, November 02, 2009 8:09 AM EDT

Urban Outfitters (NasdaqNM: URBN) ended the last trading session at $31.38. 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 30.33 and resistance in the 33.21 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 Jan '10 29 covered call (URQ AU) for a net debit in the $27.38 area. That is also the break even stock price for this trade. This covered call has a 75 day duration, provides 12.75% downside protection and a 5.92% assigned return rate for a 28.79% 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 Jan '10 29 call (URQ AU) for an $18.55 debit. The trade has a 75 day life and would provide 9.02% downside protection and a 2.43% assigned return rate for a 12.00% annualized return rate (for comparison purposes only). Urban Outfitters does not pay dividends at this time. [ABR-Seven Summits Research]

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