Dillards (DDS) Showing Bearish Technicals With Resistance at 16.93

Posted: Tuesday, February 09, 2010 8:53 AM EDT
By: Market Intelligence Center Staff

Dillards (NYSE: DDS) ended the last trading session at $15.87. So far the stock has hit a 52-week low of $2.96 and 52-week high of $20.17. Dillards stock has been showing support around 14.41 and resistance in the 16.93 range. Technical indicators for the stock are Bearish and S&P gives DDS a weak 2 STAR (out of 5) sell rating. DDS appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '11 15 covered call for a net debit in the $12.77 area. That is also the break even stock price for this trade. This covered call has a 348 day duration, provides 19.53% downside protection and a 17.46% assigned return rate for an 18.32% 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 DDS Jan '11 10 Call and selling the Jan '11 15 call for a $3.50 debit. The trade has a 348 day life and would provide 14.93% downside protection and a 42.86% assigned return rate for a 45.00% annualized return rate (for comparison purposes only). Dillards has a current annual dividend yield of 0.93%. [ABR-Seven Summits Research]