Intercontinental Exchange (ICE) 11/5/09 PriceWatch Alert Targets 11.21% Downside Protection

Posted: Thursday, November 05, 2009 8:34 AM EDT

Intercontinental Exchange (NYSE: ICE) closed yesterday at $99.88. So far the stock has hit a 52-week low of $49.69 and 52-week high of $121.93. Intercontinental Exchange stock has been showing support around 97.19 and resistance in the 104.65 range. Technical indicators for the stock are Neutral and S&P gives ICE a neutral 3 STAR (out of 5) hold rating. ICE appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '10 95 covered call (ICE AS) for a net debit in the $88.68 area. That is also the break even stock price for this trade. This covered call has a 72 day duration, provides 11.21% downside protection and a 7.13% assigned return rate for a 36.13% 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 ICE Jan '11 30 Call (VWU AF) and selling the Jan '10 95 call (ICE AS) for a $60.50 debit. The trade has a 72 day life and would provide 9.39% downside protection and a 7.44% assigned return rate for a 38.00% annualized return rate (for comparison purposes only). Intercontinental Exchange does not pay dividends at this time. [THA-Seven Summits Research]

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