CH Robinson Worldwide (CHRW) PriceWatch Alert Could Hit 36.31% Return

Posted on Friday, September 05, 2008 8:07 AM

CH Robinson Worldwide (NasdaqNM: CHRW) closed yesterday at $50.40. So far the stock has hit a 52-week low of $45.01 and 52-week high of $67.36. CH Robinson Worldwide stock has been showing support around 49.09 and resistance in the 52.53 range. Technical indicators for the stock are Bearish and S&P gives CHRW a positive 4 STAR (out of 5) buy rating. CHRW appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Nov '08 50 covered call (CJQ KJ) for a net debit in the $46.40 area. That is also the break even stock price for this trade. This covered call has a 78 day duration, provides 7.94% downside protection and a 7.76% assigned return rate for a 36.31% 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 CHRW Jan '10 30 Call (LYW AF) and selling the Nov '08 50 call (CJQ KJ) for an $18.50 debit. The trade has a 78 day life and would provide 3.77% downside protection and an 8.11% assigned return rate for a 38.00% annualized return rate (for comparison purposes only). CH Robinson Worldwide has a current annual dividend yield of 1.69%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]