Delta Air Lines Inc. (DAL) 3/10/10 PriceWatch Alert With Support Around $12.25

Posted: Wednesday, March 10, 2010 8:24 AM EDT
By: Market Intelligence Center Staff

Delta Air Lines Inc. (NYSE: DAL) closed yesterday at $12.81. So far the stock has hit a 52-week low of $4.13 and 52-week high of $13.73. Delta Air Lines stock has been showing support around 12.25 and resistance in the 13.55 range. Technical indicators for the stock are Bullish and S&P gives DAL a positive 4 STAR (out of 5) buy rating. DAL appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Sep '10 11 covered call for a net debit in the $9.86 area. That is also the break even stock price for this trade. This covered call has a 192 day duration, provides 23.03% downside protection and an 11.56% assigned return rate for a 21.98% 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 DAL Jan '11 5 Call and selling the Sep '10 11 call for a $5.30 debit. The trade has a 192 day life and would provide 19.59% downside protection and a 13.21% assigned return rate for a 25.00% annualized return rate (for comparison purposes only). Delta Air Lines does not pay dividends at this time. [WBA-Seven Summits Research]