UBS (UBS) 11/10/09 PriceWatch Alert Targets 17.97% Return

Posted: Tuesday, November 10, 2009 8:05 AM EDT
By: Market Intelligence Center Staff

UBS (NYSE: UBS) closed yesterday at $17.33. So far the stock has hit a 52-week low of $7.04 and 52-week high of $19.32. UBS stock has been showing support around 16.82 and resistance in the 17.70 range. Technical indicators for the stock are Neutral and S&P gives UBS a neutral 3 STAR (out of 5) hold rating. UBS appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jun '10 16 covered call (UBS FP) for a net debit in the $14.43 area. That is also the break even stock price for this trade. This covered call has a 221 day duration, provides 16.73% downside protection and a 10.88% assigned return rate for a 17.97% 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 UBS Jan '11 7.50 Call (ODX AU) and selling the Jun '10 16 call (UBS FP) for a $7.35 debit. The trade has a 221 day life and would provide 14.31% downside protection and a 15.65% assigned return rate for a 26.00% annualized return rate (for comparison purposes only). UBS does not pay dividends at this time. [ATU-Seven Summits Research]