National Semiconductor (NSM) 11/18/09 PriceWatch Alert Down To $12.69 Break Even

Posted: Wednesday, November 18, 2009 8:45 AM EDT
By: Market Intelligence Center Staff

National Semiconductor (NYSE: NSM) closed yesterday at $14.44. So far the stock has hit a 52-week low of $9.02 and 52-week high of $16.20. National Semiconductor stock has been showing support around 13.97 and resistance in the 14.75 range. Technical indicators for the stock are Bullish and S&P gives NSM a positive 4 STAR (out of 5) buy rating. NSM appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a May '10 14 covered call (NSM EG) for a net debit in the $12.69 area. That is also the break even stock price for this trade. This covered call has an 185 day duration, provides 12.12% downside protection and a 10.32% assigned return rate for a 20.37% 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 NSM Jan '11 10 Call (VSN AB) and selling the May '10 14 call (NSM EG) for a $3.35 debit. The trade has an 185 day life and would provide 7.55% downside protection and a 19.40% assigned return rate for a 38.00% annualized return rate (for comparison purposes only). National Semiconductor has a current annual dividend yield of 2.29%. [WBA-Seven Summits Research]