D R Horton (DHI) 2/5/10 PriceWatch Alert Support Down To $12.76

Posted: Friday, February 05, 2010 8:24 AM EDT
By: Market Intelligence Center Staff

D R Horton (NYSE: DHI) closed yesterday at $13.21. So far the stock has hit a 52-week low of $6.62 and 52-week high of $13.90. D R Horton stock has been showing support around 12.76 and resistance in the 13.56 range. Technical indicators for the stock are Bullish and S&P gives DHI a positive 4 STAR (out of 5) buy rating. DHI appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Aug '10 12 covered call for a net debit in the $10.86 area. That is also the break even stock price for this trade. This covered call has a 197 day duration, provides 17.79% downside protection and a 10.50% assigned return rate for a 19.45% 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 DHI Jan '11 7.50 Call and selling the Aug '10 12 call for a $3.80 debit. The trade has a 197 day life and would provide 14.46% downside protection and an 18.42% assigned return rate for a 34.00% annualized return rate (for comparison purposes only). D R Horton has a current annual dividend yield of 1.14%. [FBB-Seven Summits Research]