Amgen (AMGN) PriceWatch Alert for November 4, 2009

Posted: Wednesday, November 04, 2009 8:14 AM EDT
By: Market Intelligence Center Staff

Amgen (NasdaqNM: AMGN) closed yesterday at $52.54. 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 51.60 and resistance in the 53.34 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 a Jan '10 55 covered call (YAA AK) for a net debit in the $50.64 area. That is also the break even stock price for this trade. This covered call has a 73 day duration, provides 3.62% downside protection and an 8.61% assigned return rate for a 43.05% 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 30 Call (VAM AF) and selling the Jan '10 55 call (YAA AK) for a $21.60 debit. The trade has a 73 day life and would provide 1.79% downside protection and a 15.74% assigned return rate for a 79.00% annualized return rate (for comparison purposes only). Amgen does not pay dividends at this time. [WBA-Seven Summits Research]