Potential GameStop (GME) Trade Has 7.98% Downside Protection

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Dec 13, 2012 (Marketintelligencecenter.com via COMTEX) -- GameStop Corp. (NYSE:GME) closed Wednesday's trading session at $27.83. In the past year, the stock has hit a 52-week low of $15.32 and 52-week high of $28.19. GameStop (GME) stock has been showing support around $27.46 and resistance in the $28.38 range. Technical indicators for the stock are Bullish and S&P gives GameStop (GME) a positive 4 STARS (out of 5) buy rating. For a hedged play on GameStop (GME), look at the Apr '13 $28.00 covered call for a net debit in the $25.61 area. That is also the break-even stock price for this trade. This covered call has a duration of 128 days, provides 7.98% downside protection and an assigned return rate of 9.33% for an annualized return rate of 26.61% (for comparison purposes only). A lower-cost hedged play for GameStop (GME) would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the GameStop (GME) Jan '14 $20.00 call and selling the Apr '13 $28.00 call for a total debit of $6.48. The trade has a lifespan of 128 days and would provide 4.85% downside protection and an assigned return rate of 23.46% for an annualized return rate of 67% (for comparison purposes only). GameStop (GME) has a current annual dividend yield of 3.64%.


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As of Sunday, 12-09-2012 23:59, the latest Comtex SmarTrendA? Alert,
an automated pattern recognition system, indicated a DOWNTREND on
04-02-2012 for GME @ $22.14.

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provider or go to www.mysmartrend.com

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