UBS (UBS) 11/12/09 PriceWatch Alert Shows Bullish Technicals

Posted: Thursday, November 12, 2009 8:28 AM EDT
By: Market Intelligence Center Staff

UBS (NYSE: UBS) closed yesterday at $17.26. 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 16.98 and resistance in the 17.74 range. Technical indicators for the stock are Bullish 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 Mar '10 16 covered call (UBS CP) for a net debit in the $14.86 area. That is also the break even stock price for this trade. This covered call has a 128 day duration, provides 13.90% downside protection and a 7.67% assigned return rate for a 21.88% 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 UBS Jan '11 7.50 Call (ODX AU) and selling the Mar '10 16 call (UBS CP) for an $8.05 debit. The trade has a 128 day life and would provide 9.91% downside protection and a 5.59% assigned return rate for a 16.00% annualized return rate (for comparison purposes only). UBS does not pay dividends at this time. [THA-Seven Summits Research]