Urban Outfitters (URBN) 11/17/09 PriceWatch Alert With $30.86 Break Even

Posted: Tuesday, November 17, 2009 8:40 AM EDT
By: Market Intelligence Center Staff

Urban Outfitters (NasdaqNM: URBN) closed yesterday at $34.56. So far the stock has hit a 52-week low of $12.33 and 52-week high of $34.67. Urban Outfitters stock has been showing support around 33.91 and resistance in the 34.99 range. Technical indicators for the stock are Bullish and S&P gives URBN a positive 4 STAR (out of 5) buy rating. URBN appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Mar '10 34 covered call (HXW CB) for a net debit in the $30.86 area. That is also the break even stock price for this trade. This covered call has a 123 day duration, provides 10.71% downside protection and a 10.17% assigned return rate for a 30.19% 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 URBN Jan '11 17.50 Call (ZLL AW) and selling the Mar '10 34 call (HXW CB) for a $14.45 debit. The trade has a 123 day life and would provide 7.55% downside protection and a 14.19% assigned return rate for a 42.00% annualized return rate (for comparison purposes only). Urban Outfitters does not pay dividends at this time. [ATU-Seven Summits Research]