Fastenal (FAST) Showing Bullish Technicals And Very Positive 5 STARs S&P Rating

Posted: Tuesday, October 20, 2009 9:19 AM EDT

Fastenal (NasdaqNM: FAST) closed yesterday at $38.95. So far the stock has hit a 52-week low of $25.87 and 52-week high of $42.48. Fastenal stock has been showing support around 37.88 and resistance in the 39.66 range. Technical indicators for the stock are Bullish and S&P gives FAST a very positive 5 STAR (out of 5) strong buy rating. FAST appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Feb '10 35 covered call (FQA BG) for a net debit in the $33.95 area. That is also the break even stock price for this trade. This covered call has a 123 day duration, provides 12.84% downside protection and a 3.09% assigned return rate for a 9.18% 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 FAST Jan '11 20 Call (VWS AD) and selling the Feb '10 35 call (FQA BG) for a $14.45 debit. The trade has a 123 day life and would provide 11.55% downside protection and a 3.81% assigned return rate for an 11.00% annualized return rate (for comparison purposes only). Fastenal has a current annual dividend yield of 1.87%. [ATU-Seven Summits Research]

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