Activision (ATVI) 11/19/09 PriceWatch Alert Shows Bullish Technicals

Posted: Thursday, November 19, 2009 8:13 AM EDT
By: Market Intelligence Center Staff

Activision (NasdaqNM: ATVI) closed yesterday at $11.87. So far the stock has hit a 52-week low of $8.14 and 52-week high of $13.14. Activision stock has been showing support around 11.53 and resistance in the 12.07 range. Technical indicators for the stock are Bullish and S&P gives ATVI a neutral 3 STAR (out of 5) hold rating. ATVI appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a May '10 11 covered call (AQV EK) for a net debit in the $10.07 area. That is also the break even stock price for this trade. This covered call has an 184 day duration, provides 15.16% downside protection and a 9.24% assigned return rate for an 18.32% 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 ATVI Jan '11 5 Call (VEN AA) and selling the May '10 11 call (AQV EK) for a $5.25 debit. The trade has an 184 day life and would provide 13.65% downside protection and a 14.29% assigned return rate for a 28.00% annualized return rate (for comparison purposes only). Activision does not pay dividends at this time. [THA-Seven Summits Research]