Celgene (CELG) 11/6/09 PriceWatch Alert With $48.73 Break Even

Posted: Friday, November 06, 2009 8:36 AM EDT
By: Market Intelligence Center Staff

Celgene (NasdaqNM: CELG) closed yesterday at $51.83. So far the stock has hit a 52-week low of $36.90 and 52-week high of $63.30. Celgene stock has been showing support around 50.60 and resistance in the 52.76 range. Technical indicators for the stock are Bearish and S&P gives CELG a very positive 5 STAR (out of 5) strong buy rating. CELG appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Jan '10 52.50 covered call (LQH AT) for a net debit in the $48.73 area. That is also the break even stock price for this trade. This covered call has a 71 day duration, provides 5.98% downside protection and a 7.74% assigned return rate for a 39.77% 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 CELG Jan '11 20 Call (VCS AD) and selling the Jan '10 52.50 call (LQH AT) for a $29.40 debit. The trade has a 71 day life and would provide 4.69% downside protection and a 10.54% assigned return rate for a 54.00% annualized return rate (for comparison purposes only). Celgene does not pay dividends at this time. [FBB-Seven Summits Research]