Cognizant Technology Solutions (CTSH) 11/6/09 PriceWatch Alert Support At Around $41.59

Posted: Friday, November 06, 2009 8:37 AM EDT
By: Market Intelligence Center Staff

Cognizant Technology Solutions (NasdaqNM: CTSH) closed yesterday at $42.78. So far the stock has hit a 52-week low of $14.38 and 52-week high of $43.09. Cognizant Technology stock has been showing support around 41.59 and resistance in the 43.51 range. Technical indicators for the stock are Bullish and S&P gives CTSH a positive 4 STAR (out of 5) buy rating. CTSH appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '10 40 covered call (UPU AH) for a net debit in the $38.58 area. That is also the break even stock price for this trade. This covered call has a 71 day duration, provides 9.82% downside protection and a 3.68% assigned return rate for an 18.92% 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 CTSH Jan '11 15 Call (VJO AC) and selling the Jan '10 40 call (UPU AH) for a $24.10 debit. The trade has a 71 day life and would provide 8.60% downside protection and a 3.73% assigned return rate for a 19.00% annualized return rate (for comparison purposes only). Cognizant Technology does not pay dividends at this time. [FBB-Seven Summits Research]