TD Ameritrade (NASDAQ:AMTD) closed Wednesday’s winning trading session at $15.07. In the past year, the stock has hit a 52-week low of $13.43 and 52-week high of $22.90. TD Ameritrade(AMTD) stock has been showing support around $14.33 and resistance in the $15.49 range. Technical indicators for the stock are Bearish and S&P gives TD Ameritrade (AMTD) a positive 4 STARS (out of 5) buy rating. For a hedged play on TD Ameritrade (AMTD), look at the Feb ’12 $14.00 covered call for a net debit in the $13.12 area. That is also the break-even stock price for this trade. This covered call has a duration of 135 days, provides 12.94% downside protection and an assigned return rate of 6.71% for an annualized return rate of 18.13% (for comparison purposes only). A lower-cost hedged play for TD Ameritrade (AMTD) would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the TD Ameritrade (AMTD)Jan ’13 $5.00 call and selling the Feb ’12 $14.00 call for a total debit of $7.95. The trade has a lifespan of 135 days and would provide 14.07% downside protection and an assigned return rate of 13.21% for an annualized return rate of 36% (for comparison purposes only). TD Ameritrade (AMTD) has a current annual dividend yield of 1.36%. [ATU-Seven Summits Research]
Potential TD Ameritrade (AMTD) Trade Has $13.12 Breakeven
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