Nokia (NOK) 11/20/09 PriceWatch Alert Down To $11.92 Break Even

Posted: Friday, November 20, 2009 8:19 AM EDT
By: Market Intelligence Center Staff

Nokia (NYSE: NOK) closed yesterday at $13.61. So far the stock has hit a 52-week low of $8.47 and 52-week high of $16.73. Nokia stock has been showing support around 13.30 and resistance in the 13.84 range. Technical indicators for the stock are Bearish and S&P gives NOK a neutral 3 STAR (out of 5) hold rating. NOK appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Apr '10 13 covered call (NOK DM) for a net debit in the $11.92 area. That is also the break even stock price for this trade. This covered call has a 148 day duration, provides 12.42% downside protection and a 9.06% assigned return rate for a 22.34% 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 NOK Jan '11 7.50 Call (VOK AU) and selling the Apr '10 13 call (NOK DM) for a $4.51 debit. The trade has a 148 day life and would provide 11.76% downside protection and a 21.95% assigned return rate for a 54.00% annualized return rate (for comparison purposes only). Nokia has a current annual dividend yield of 2.87%. [FBB-Seven Summits Research]