Autodesk (ADSK) 11/20/09 PriceWatch Alert Up To 12.06% Downside Protection

Posted: Friday, November 20, 2009 8:34 AM EDT
By: Market Intelligence Center Staff

Autodesk (NasdaqNM: ADSK) closed yesterday at $24.05. So far the stock has hit a 52-week low of $11.70 and 52-week high of $27.97. Autodesk stock has been showing support around 23.42 and resistance in the 24.68 range. Technical indicators for the stock are Bearish and S&P gives ADSK a weak 2 STAR (out of 5) sell rating. ADSK appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Apr '10 23 covered call (ADQ DJ) for a net debit in the $21.15 area. That is also the break even stock price for this trade. This covered call has a 148 day duration, provides 12.06% downside protection and an 8.75% assigned return rate for a 21.57% 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 ADSK Jan '11 10 Call (ZPD AB) and selling the Apr '10 23 call (ADQ DJ) for an $11.45 debit. The trade has a 148 day life and would provide 10.81% downside protection and a 13.54% assigned return rate for a 33.00% annualized return rate (for comparison purposes only). Autodesk does not pay dividends at this time. [FBB-Seven Summits Research]