Akamai Technologies (AKAM) 11/6/09 PriceWatch Alert At $18.75 Break Even

Posted: Friday, November 06, 2009 8:38 AM EDT
By: Market Intelligence Center Staff

Akamai Technologies (NasdaqNM: AKAM) closed yesterday at $22.85. So far the stock has hit a 52-week low of $9.25 and 52-week high of $23.58. Akamai Technologies stock has been showing support around 22.30 and resistance in the 23.52 range. Technical indicators for the stock are Bullish and S&P gives AKAM a neutral 3 STAR (out of 5) hold rating. AKAM appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a May '10 21 covered call (UMU ET) for a net debit in the $18.75 area. That is also the break even stock price for this trade. This covered call has a 197 day duration, provides 17.94% downside protection and a 12.00% assigned return rate for a 22.23% 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 AKAM Jan '11 10 Call (OMU AB) and selling the May '10 21 call (UMU ET) for a $9.20 debit. The trade has a 197 day life and would provide 15.97% downside protection and a 19.57% assigned return rate for a 36.00% annualized return rate (for comparison purposes only). Akamai Technologies does not pay dividends at this time. [FBB-Seven Summits Research]