NetApp (NTAP) 9/3/10 PriceWatch Alert Down To $39.32 Break Even

Posted: Friday, September 03, 2010 8:28 AM EDT
By: Market Intelligence Center Staff

NetApp (NASDAQ: NTAP) closed yesterday at $43.07. So far the stock has hit a 52-week low of $22.14 and 52-week high of $44.89. NetApp stock has been showing support around 41.38 and resistance in the 44.06 range. Technical indicators for the stock are Bullish and S&P gives NTAP a neutral 3 STAR (out of 5) hold rating. NTAP appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Dec '10 43 covered call for a net debit in the $39.32 area. That is also the break even stock price for this trade. This covered call has a 106 day duration, provides 8.71% downside protection and a 9.36% assigned return rate for a 32.23% 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 NTAP Jan '12 20 Call and selling the Dec '10 43 call for a $19.95 debit. The trade has a 106 day life and would provide 7.24% downside protection and a 15.29% assigned return rate for a 53.00% annualized return rate (for comparison purposes only). NetApp does not pay dividends at this time. [FBB-Seven Summits Research]