NVIDIA (NVDA) 11/6/09 PriceWatch Alert With Support Around $11.94

Posted: Friday, November 06, 2009 8:23 AM EDT

NVIDIA (NasdaqNM: NVDA) closed yesterday at $12.27. So far the stock has hit a 52-week low of $5.75 and 52-week high of $16.58. NVIDIA stock has been showing support around 11.94 and resistance in the 12.56 range. Technical indicators for the stock are Bearish and S&P gives NVDA a neutral 3 STAR (out of 5) hold rating. NVDA appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jun '10 11 covered call (UVA FK) for a net debit in the $9.84 area. That is also the break even stock price for this trade. This covered call has a 225 day duration, provides 19.80% downside protection and an 11.79% assigned return rate for a 19.12% 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 NVDA Jan '11 5 Call (OLI AA) and selling the Jun '10 11 call (UVA FK) for a $5.22 debit. The trade has a 225 day life and would provide 16.71% downside protection and a 14.94% assigned return rate for a 24.00% annualized return rate (for comparison purposes only). NVIDIA does not pay dividends at this time. [FBB-Seven Summits Research]

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