Broadcom (BRCM) Could Cross Over Resistance Level at 33.74 Today

Posted: Wednesday, September 08, 2010 8:59 AM EDT
By: Market Intelligence Center Staff

Broadcom (NASDAQ: BRCM) ended the last trading session at $33.25. So far the stock has hit a 52-week low of $25.76 and 52-week high of $38.47. Broadcom stock has been showing support around 32.54 and resistance in the 33.74 range. Technical indicators for the stock are Neutral and S&P gives BRCM a neutral 3 STAR (out of 5) hold rating. BRCM appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Nov '10 32 covered call for a net debit in the $30.25 area. That is also the break even stock price for this trade. This covered call has a 73 day duration, provides 9.02% downside protection and a 5.79% assigned return rate for a 28.93% 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 BRCM Jan '12 17.50 Call and selling the Nov '10 32 call for a $13.35 debit. The trade has a 73 day life and would provide 7.22% downside protection and an 8.61% assigned return rate for a 43.00% annualized return rate (for comparison purposes only). Broadcom has a current annual dividend yield of 0.98%. [WBA-Seven Summits Research]