NutriSystem (NTRI) 2/9/10 PriceWatch Alert Could Hit 20.30% Return

Posted: Tuesday, February 09, 2010 8:32 AM EDT
By: Market Intelligence Center Staff

NutriSystem (NASDAQ: NTRI) closed yesterday at $20.52. So far the stock has hit a 52-week low of $10.28 and 52-week high of $33.54. NutriSystem stock has been showing support around 19.44 and resistance in the 21.64 range. Technical indicators for the stock are Bearish. NTRI appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jun '10 17.50 covered call for a net debit in the $16.32 area. That is also the break even stock price for this trade. This covered call has a 130 day duration, provides 20.47% downside protection and a 7.23% assigned return rate for a 20.30% 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 NTRI Jan '11 10 Call and selling the Jun '10 17.50 call for a $6.60 debit. The trade has a 130 day life and would provide 19.10% downside protection and a 13.64% assigned return rate for a 38.00% annualized return rate (for comparison purposes only). NutriSystem has a current annual dividend yield of 3.47%. [ATU-Seven Summits Research]