Illumina (ILMN) 11/19/09 PriceWatch Alert With Support Around $26.45

Posted: Thursday, November 19, 2009 8:25 AM EDT
By: Market Intelligence Center Staff

Illumina (NasdaqNM: ILMN) closed yesterday at $29.18. So far the stock has hit a 52-week low of $18.82 and 52-week high of $44.07. Illumina stock has been showing support around 26.45 and resistance in the 32.55 range. Technical indicators for the stock are Bearish and S&P gives ILMN a positive 4 STAR (out of 5) buy rating. ILMN appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Mar '10 25 covered call (IQA CE) for a net debit in the $23.68 area. That is also the break even stock price for this trade. This covered call has a 121 day duration, provides 18.85% downside protection and a 5.57% assigned return rate for a 16.82% 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 ILMN Jan '11 7.50 Call (ZYC AO) and selling the Mar '10 25 call (IQA CE) for a $16.65 debit. The trade has a 121 day life and would provide 17.24% downside protection and a 5.11% assigned return rate for a 15.00% annualized return rate (for comparison purposes only). Illumina does not pay dividends at this time. [THA-Seven Summits Research]