H and R Block (HRB) PriceWatch Alert Bearish Price Movement

Posted: Tuesday, March 24, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

H and R Block (NYSE: HRB) closed yesterday at $17.38. So far the stock has hit a 52-week low of $15.00 and 52-week high of $27.97. H and R Block stock has been showing support around 15.33 and resistance in the 20.73 range. Technical indicators for the stock are Bearish and S&P gives HRB a weak 2 STAR (out of 5) sell rating. HRB appears on the Investors Observer Stocks In The News list. HRB fell $1.75 (-9.15%) Monday after the company said it is seeing a slight dropoff in tax returns filed at its retail offices this year. For a hedged play on this stock, look at a Jul '09 15 covered call (HRB GC) for a net debit in the $14.08 area. That is also the break even stock price for this trade. This covered call has an 116 day duration, provides 18.99% downside protection and a 6.53% assigned return rate for a 20.56% 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 HRB Jan '10 7.50 Call (WMV AU) and selling the Jul '09 15 call (HRB GC) for a $6.75 debit. The trade has an 116 day life and would provide 18.01% downside protection and an 11.11% assigned return rate for a 35.00% annualized return rate (for comparison purposes only). H and R Block has a current annual dividend yield of 3.08%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]