UBS (UBS) 11/18/09 PriceWatch Alert Up To 15.71% Return

Posted: Wednesday, November 18, 2009 8:12 AM EDT
By: Market Intelligence Center Staff

UBS (NYSE: UBS) closed yesterday at $16.74. 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 16.15 and resistance in the 17.45 range. Technical indicators for the stock are Bearish 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 Jun '10 15 covered call (UBS FC) for a net debit in the $13.74 area. That is also the break even stock price for this trade. This covered call has a 213 day duration, provides 17.92% downside protection and a 9.17% assigned return rate for a 15.71% 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 5 Call (ODX AA) and selling the Jun '10 15 call (UBS FC) for a $9.35 debit. The trade has a 213 day life and would provide 14.28% downside protection and a 6.95% assigned return rate for a 12.00% annualized return rate (for comparison purposes only). UBS does not pay dividends at this time. [WBA-Seven Summits Research]