Medcohealth Solutions (MHS) 11/6/09 PriceWatch Alert Up To 30.88% Return

Posted: Friday, November 06, 2009 8:32 AM EDT
By: Market Intelligence Center Staff

Medcohealth Solutions (NYSE: MHS) closed yesterday at $59.00. So far the stock has hit a 52-week low of $34.26 and 52-week high of $60.90. Medcohealth Solutions stock has been showing support around 55.99 and resistance in the 61.19 range. Technical indicators for the stock are Bullish and S&P gives MHS a very positive 5 STAR (out of 5) strong buy rating. MHS appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jan '10 60 covered call (MHS AL) for a net debit in the $56.60 area. That is also the break even stock price for this trade. This covered call has a 71 day duration, provides 4.07% downside protection and a 6.01% assigned return rate for a 30.88% 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 MHS Jan '11 30 Call (VQM AF) and selling the Jan '10 60 call (MHS AL) for a $27.05 debit. The trade has a 71 day life and would provide 3.31% downside protection and a 10.91% assigned return rate for a 56.00% annualized return rate (for comparison purposes only). Medcohealth Solutions does not pay dividends at this time. [FBB-Seven Summits Research]