Priceline com (PCLN) 9/8/10 PriceWatch Alert Could Hit 42.10% Return

Posted: Wednesday, September 08, 2010 8:20 AM EDT
By: Market Intelligence Center Staff

Priceline com (NASDAQ: PCLN) ended the last trading session at $311.55. So far the stock has hit a 52-week low of $154.00 and 52-week high of $318.00. Priceline com stock has been showing support around 308.35 and resistance in the 317.07 range. Technical indicators for the stock are Bullish and S&P gives PCLN a neutral 3 STAR (out of 5) hold rating. PCLN appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '11 330 covered call for a net debit in the $285.25 area. That is also the break even stock price for this trade. This covered call has a 136 day duration, provides 8.44% downside protection and a 15.69% assigned return rate for a 42.10% 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 PCLN Jan '12 140 Call and selling the Jan '11 330 call for a $154.50 debit. The trade has a 136 day life and would provide 5.47% downside protection and a 22.98% assigned return rate for a 62.00% annualized return rate (for comparison purposes only). Priceline com does not pay dividends at this time. [WBA-Seven Summits Research]