Amazon.com, Inc. (AMZN) PriceWatch Alert for November 17, 2009

Posted: Tuesday, November 17, 2009 8:34 AM EDT
By: Market Intelligence Center Staff

Amazon.com, Inc. (NasdaqNM: AMZN) closed yesterday at $131.59. So far the stock has hit a 52-week low of $34.68 and 52-week high of $134.56. Amazon stock has been showing support around 128.80 and resistance in the 135.96 range. Technical indicators for the stock are Bullish and S&P gives AMZN a neutral 3 STAR (out of 5) hold rating. AMZN appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Jan '10 135 covered call (QZN AG) for a net debit in the $124.74 area. That is also the break even stock price for this trade. This covered call has a 60 day duration, provides 5.21% downside protection and an 8.23% assigned return rate for a 50.04% 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 AMZN Jan '11 40 Call (VON AH) and selling the Jan '10 135 call (QZN AG) for an $85.35 debit. The trade has a 60 day life and would provide 4.74% downside protection and an 11.31% assigned return rate for a 69.00% annualized return rate (for comparison purposes only). Amazon does not pay dividends at this time. [ATU-Seven Summits Research]