Xilinx (XLNX) 11/13/09 PriceWatch Alert Targets 19.23% Return

Posted: Friday, November 13, 2009 8:22 AM EDT

Xilinx (NasdaqNM: XLNX) closed yesterday at $22.82. So far the stock has hit a 52-week low of $14.28 and 52-week high of $24.49. Xilinx stock has been showing support around 22.41 and resistance in the 23.51 range. Technical indicators for the stock are Bullish and S&P gives XLNX a neutral 3 STAR (out of 5) hold rating. XLNX appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Mar '10 22 covered call (XLQ CH) for a net debit in the $20.62 area. That is also the break even stock price for this trade. This covered call has a 127 day duration, provides 9.64% downside protection and a 6.69% assigned return rate for a 19.23% 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 XLNX Jan '11 12.50 Call (VDJ AV) and selling the Mar '10 22 call (XLQ CH) for an $8.60 debit. The trade has a 127 day life and would provide 7.54% downside protection and a 10.47% assigned return rate for a 30.00% annualized return rate (for comparison purposes only). Xilinx has a current annual dividend yield of 2.83%. [FBB-Seven Summits Research]

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