Overview – Autodesk (NASDAQ: ADSK)
ADSK operates as a design software and services company with customers in the architecture, engineering and construction, manufacturing, and digital media and entertainment industries. It will report first quarter earnings on May 19.
Fourth-quarter revenues were up 16% year-over-year, while ADSK adjusted earnings of $0.35 per share beat the analyst expectations of $0.34. Management expects continued revenue growth and ADSK repurchased over $250 million of its common stock in fiscal 2011. Shares have increased more than 12% year to date.
Today, ADSK introduced a new version of its Autodesk Sketch Book Pro for iPad applications, updated for the iPad 2.
Stock is currently trading near $45.00 and it appears that both the 50-day and 200-day moving averages are rising.
Options Trade – Covered Call
With stock trading here, we would consider writing (selling) an out-of-the-money call.
An investor could purchase stock at $44.75 and sell the ADSK June 47 Call for 1.05. This strategy would the give the investor a breakeven in the stock of $43.70 ($44.75 – $1.05 = $43.70).
At June expiration if the stock is below the 47 strike price the investor gets to keep the premium. Should the stock close above 47, the calls would finish in the money and the investor would be obligated to deliver shares. With this strategy, the investor is limiting his profit potential to the upside.
Stutland Equities is a premier futures and options trading company on the Chicago Board Options Exchange. Founded in 2005 and headquartered in Chicago, Stutland Equities specializes in volatility arbitrage across multiple asset classes.
