Baidu.com (BIDU) Looking Bullish In Pre-Market Trading

Posted: Wednesday, September 08, 2010 8:51 AM EDT
By: Market Intelligence Center Staff

Baidu.com (NASDAQ: BIDU) ended the last trading session at $82.27. So far the stock has hit a 52-week low of $35.00 and 52-week high of $88.32. Baidu.com stock has been showing support around 80.58 and resistance in the 85.44 range. Technical indicators for the stock are Bullish and S&P gives BIDU a neutral 3 STAR (out of 5) hold rating. BIDU appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Dec '10 82 covered call for a net debit in the $73.97 area. That is also the break even stock price for this trade. This covered call has a 101 day duration, provides 10.09% downside protection and a 10.86% assigned return rate for a 39.23% 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 BIDU Jan '12 37 Call and selling the Dec '10 82 call for a $39.70 debit. The trade has a 101 day life and would provide 6.77% downside protection and a 13.35% assigned return rate for a 48.00% annualized return rate (for comparison purposes only). Baidu.com does not pay dividends at this time. [WBA-Seven Summits Research]