UBS (UBS) 11/4/09 PriceWatch Alert Support At Around $15.47

Posted: Wednesday, November 04, 2009 8:24 AM EDT

UBS (NYSE: UBS) closed yesterday at $16.24. So far the stock has hit a 52-week low of $7.04 and 52-week high of $19.32. UBS stock has been showing support around 15.47 and resistance in the 16.65 range. Technical indicators for the stock are Bearish and S&P gives UBS a neutral 3 STAR (out of 5) hold rating. UBS appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Mar '10 15 covered call (UBS CC) for a net debit in the $13.89 area. That is also the break even stock price for this trade. This covered call has a 136 day duration, provides 14.47% downside protection and a 7.99% assigned return rate for a 21.45% 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 UBS Jan '11 5 Call (ODX AA) and selling the Mar '10 15 call (UBS CC) for an $8.90 debit. The trade has a 136 day life and would provide 14.41% downside protection and a 12.36% assigned return rate for a 33.00% annualized return rate (for comparison purposes only). UBS does not pay dividends at this time. [WBA-Seven Summits Research]

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