Reynolds American (RAI) PriceWatch Alert Up To 10.74% Downside Protection

Posted: Monday, July 06, 2009 8:07 AM EDT

Reynolds American (NYSE: RAI) closed yesterday at $38.16. So far the stock has hit a 52-week low of $31.55 and 52-week high of $57.73. Reynolds American stock has been showing support around 37.27 and resistance in the 39.75 range. Technical indicators for the stock are Bullish and S&P gives RAI a neutral 3 STAR (out of 5) hold rating. RAI appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Nov '09 35 covered call (RAI KG) for a net debit in the $34.06 area. That is also the break even stock price for this trade. This covered call has a 138 day duration, provides 10.74% downside protection and a 2.76% assigned return rate for a 7.30% annualized return rate (comparison purposes only). Reynolds American has a current annual dividend yield of 8.82%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]

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