Novellus Systems (NVLS) 11/4/09 PriceWatch Alert With Support Around $19.14

Posted: Wednesday, November 04, 2009 8:30 AM EDT
By: Market Intelligence Center Staff

Novellus Systems (NasdaqNM: NVLS) closed yesterday at $19.71. So far the stock has hit a 52-week low of $10.26 and 52-week high of $23.17. Novellus Systems stock has been showing support around 19.14 and resistance in the 20.28 range. Technical indicators for the stock are Bearish and S&P gives NVLS a positive 4 STAR (out of 5) buy rating. NVLS appears on the Investors Observer Stocks In The News list. Morgan Stanley downgraded NVLS Tuesday to Underweight from Equal Weight. For a hedged play on this stock, look at a Mar '10 17.50 covered call (NLQ CW) for a net debit in the $16.41 area. That is also the break even stock price for this trade. This covered call has a 136 day duration, provides 16.74% downside protection and a 6.64% assigned return rate for a 17.83% 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 NVLS Jan '11 10 Call (OTN AB) and selling the Mar '10 17.50 call (NLQ CW) for a $6.95 debit. The trade has a 136 day life and would provide 14.00% downside protection and a 7.91% assigned return rate for a 21.00% annualized return rate (for comparison purposes only). Novellus Systems does not pay dividends at this time. [WBA-Seven Summits Research]