Affiliated Managers Group (AMG) 11/20/09 PriceWatch Alert Shows Bullish Technicals

Posted: Friday, November 20, 2009 8:37 AM EDT
By: Market Intelligence Center Staff

Affiliated Managers Group (NYSE: AMG) closed yesterday at $67.24. So far the stock has hit a 52-week low of $17.93 and 52-week high of $73.50. Affiliated Managers Group stock has been showing support around 65.48 and resistance in the 69.90 range. Technical indicators for the stock are Bullish and S&P gives AMG a neutral 3 STAR (out of 5) hold rating. AMG appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '10 65 covered call (AMG AM) for a net debit in the $61.64 area. That is also the break even stock price for this trade. This covered call has a 57 day duration, provides 8.33% downside protection and a 5.45% assigned return rate for a 34.91% 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 AMG Jan '11 30 Call (VNB AF) and selling the Jan '10 65 call (AMG AM) for a $33.15 debit. The trade has a 57 day life and would provide 6.08% downside protection and a 5.58% assigned return rate for a 36.00% annualized return rate (for comparison purposes only). Affiliated Managers Group does not pay dividends at this time. [FBB-Seven Summits Research]