Intuit (INTU) 11/19/09 PriceWatch Alert Up To 4.61% Downside Protection

Posted: Thursday, November 19, 2009 8:09 AM EDT
By: Market Intelligence Center Staff

Intuit (NasdaqNM: INTU) closed yesterday at $30.34. So far the stock has hit a 52-week low of $20.18 and 52-week high of $31.29. Intuit stock has been showing support around 29.81 and resistance in the 30.63 range. Technical indicators for the stock are Bullish and S&P gives INTU a neutral 3 STAR (out of 5) hold rating. INTU appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jan '10 30 covered call (IQU AF) for a net debit in the $28.94 area. That is also the break even stock price for this trade. This covered call has a 58 day duration, provides 4.61% downside protection and a 3.66% assigned return rate for a 23.05% 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 INTU Jan '11 17.50 Call (OIU AW) and selling the Jan '10 30 call (IQU AF) for an $11.95 debit. The trade has a 58 day life and would provide 2.93% downside protection and a 4.60% assigned return rate for a 29.00% annualized return rate (for comparison purposes only). Intuit does not pay dividends at this time. [THA-Seven Summits Research]