Maxim Integrated Products (MXIM) 11/20/09 PriceWatch Alert Bearish Price Movement

Posted: Friday, November 20, 2009 8:40 AM EDT
By: Market Intelligence Center Staff

Maxim Integrated Products (NasdaqNM: MXIM) closed yesterday at $17.56. So far the stock has hit a 52-week low of $10.72 and 52-week high of $19.43. Maxim Integrated Products stock has been showing support around 16.79 and resistance in the 17.99 range. Technical indicators for the stock are Bearish and S&P gives MXIM a neutral 3 STAR (out of 5) hold rating. MXIM appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a May '10 17.50 covered call (XIQ EW) for a net debit in the $15.81 area. That is also the break even stock price for this trade. This covered call has an 183 day duration, provides 9.97% downside protection and a 10.69% assigned return rate for a 21.32% 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 MXIM Jan '11 15 Call (ZXB AC) and selling the May '10 17.50 call (XIQ EW) for a $2.20 debit. The trade has an 183 day life and would provide 2.05% downside protection and a 13.64% assigned return rate for a 27.00% annualized return rate (for comparison purposes only). Maxim Integrated Products has a current annual dividend yield of 4.27%. [FBB-Seven Summits Research]