Urban Outfitters (URBN) Trades Up Over 1% Yesterday And Hits Investors Observer Momentum List

Posted: Wednesday, November 04, 2009 8:19 AM EDT

Urban Outfitters (NasdaqNM: URBN) closed yesterday at $32.55. 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 31.33 and resistance in the 33.43 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 Mar '10 32 covered call (HXW CF) for a net debit in the $28.65 area. That is also the break even stock price for this trade. This covered call has a 136 day duration, provides 11.98% downside protection and an 11.69% assigned return rate for a 31.38% 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 20 Call (ZLL AD) and selling the Mar '10 32 call (HXW CF) for a $10.15 debit. The trade has a 136 day life and would provide 7.37% downside protection and an 18.23% assigned return rate for a 49.00% annualized return rate (for comparison purposes only). Urban Outfitters does not pay dividends at this time. [WBA-Seven Summits Research]

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