Steel Dynamics (STLD) 2/9/10 PriceWatch Alert Targets 18.35% Return

Posted: Tuesday, February 09, 2010 8:34 AM EDT
By: Market Intelligence Center Staff

Steel Dynamics (NASDAQ: STLD) closed yesterday at $14.85. So far the stock has hit a 52-week low of $5.95 and 52-week high of $20.47. Steel Dynamics stock has been showing support around 14.08 and resistance in the 15.58 range. Technical indicators for the stock are Bearish and S&P gives STLD a positive 4 STAR (out of 5) buy rating. STLD appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Aug '10 13 covered call for a net debit in the $11.85 area. That is also the break even stock price for this trade. This covered call has a 193 day duration, provides 20.20% downside protection and a 9.70% assigned return rate for an 18.35% 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 STLD Jan '11 10 Call and selling the Aug '10 13 call for a $2.60 debit. The trade has a 193 day life and would provide 15.15% downside protection and a 15.38% assigned return rate for a 29.00% annualized return rate (for comparison purposes only). Steel Dynamics has a current annual dividend yield of 2.03%. [ATU-Seven Summits Research]