Blue Coat Systems (BCSI) 11/20/09 PriceWatch Alert Support At Around $24.27

Posted: Friday, November 20, 2009 8:46 AM EDT
By: Market Intelligence Center Staff

Blue Coat Systems (NasdaqNM: BCSI) closed yesterday at $25.20. So far the stock has hit a 52-week low of $6.96 and 52-week high of $27.65. Blue Coat Systems stock has been showing support around 24.27 and resistance in the 26.01 range. Technical indicators for the stock are Bullish. BCSI appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at an Apr '10 20 covered call (IYU DD) for a net debit in the $18.70 area. That is also the break even stock price for this trade. This covered call has a 148 day duration, provides 25.79% downside protection and a 6.95% assigned return rate for a 17.14% 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 BCSI Jan '11 7.50 Call (ZRR AU) and selling the Apr '10 20 call (IYU DD) for an $11.50 debit. The trade has a 148 day life and would provide 24.60% downside protection and an 8.70% assigned return rate for a 21.00% annualized return rate (for comparison purposes only). Blue Coat Systems does not pay dividends at this time. [FBB-Seven Summits Research]