National Semiconductor (NSM) 11/6/09 PriceWatch Alert At $11.63 Break Even

Posted: Friday, November 06, 2009 8:18 AM EDT
By: Market Intelligence Center Staff

National Semiconductor (NYSE: NSM) closed yesterday at $13.33. So far the stock has hit a 52-week low of $9.02 and 52-week high of $16.20. National Semiconductor stock has been showing support around 13.00 and resistance in the 13.52 range. Technical indicators for the stock are Bearish and S&P gives NSM a positive 4 STAR (out of 5) buy rating. NSM appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a May '10 13 covered call (NSM EM) for a net debit in the $11.63 area. That is also the break even stock price for this trade. This covered call has a 197 day duration, provides 12.75% downside protection and an 11.78% assigned return rate for a 21.83% 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 NSM Jan '11 7.50 Call (VSN AU) and selling the May '10 13 call (NSM EM) for a $4.40 debit. The trade has a 197 day life and would provide 10.73% downside protection and a 25.00% assigned return rate for a 46.00% annualized return rate (for comparison purposes only). National Semiconductor has a current annual dividend yield of 2.47%. [FBB-Seven Summits Research]