Nasdaq Stock Market (NDAQ) 11/3/09 PriceWatch Alert Down To $14.93 Break Even

Posted: Tuesday, November 03, 2009 8:40 AM EDT

Nasdaq Stock Market (NasdaqNM: NDAQ) closed yesterday at $18.03. So far the stock has hit a 52-week low of $14.96 and 52-week high of $33.94. Nasdaq Stock Market stock has been showing support around 17.31 and resistance in the 18.67 range. Technical indicators for the stock are Bearish and S&P gives NDAQ a positive 4 STAR (out of 5) buy rating. NDAQ appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Mar '10 16 covered call (NQD CJ) for a net debit in the $14.93 area. That is also the break even stock price for this trade. This covered call has a 137 day duration, provides 17.19% downside protection and a 7.17% assigned return rate for a 19.09% 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 NDAQ Jan '11 5 Call (XGV AA) and selling the Mar '10 16 call (NQD CJ) for a $10.20 debit. The trade has a 137 day life and would provide 15.70% downside protection and a 7.84% assigned return rate for a 21.00% annualized return rate (for comparison purposes only). Nasdaq Stock Market does not pay dividends at this time. [ATU-Seven Summits Research]

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