Diana Shipping (DSX) 10/9/09 PriceWatch Alert At $11.41 Break Even

Posted: Friday, October 09, 2009 8:26 AM EDT

Diana Shipping (NYSE: DSX) closed yesterday at $14.31. So far the stock has hit a 52-week low of $6.85 and 52-week high of $19.00. Diana Shipping stock has been showing support around 13.82 and resistance in the 14.84 range. Technical indicators for the stock are Bullish. DSX appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Mar '10 12.50 covered call (DSX CV) for a net debit in the $11.41 area. That is also the break even stock price for this trade. This covered call has a 162 day duration, provides 20.27% downside protection and a 9.55% assigned return rate for a 21.52% 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 DSX Jan '11 2.50 Call (XDJ AZ) and selling the Mar '10 12.50 call (DSX CV) for a $9.25 debit. The trade has a 162 day life and would provide 17.89% downside protection and an 8.11% assigned return rate for an 18.00% annualized return rate (for comparison purposes only). Diana Shipping has a current annual dividend yield of 7.12%. [FBB-Seven Summits Research]

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