Ryder System (R) 11/3/09 PriceWatch Alert Targets 37.41% Return

Posted: Tuesday, November 03, 2009 8:32 AM EDT
By: Market Intelligence Center Staff

Ryder System (NYSE: R) closed yesterday at $40.68. So far the stock has hit a 52-week low of $19.00 and 52-week high of $46.58. Ryder System stock has been showing support around 39.37 and resistance in the 42.39 range. Technical indicators for the stock are Bullish and S&P gives R a neutral 3 STAR (out of 5) hold rating. R appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jan '10 40 covered call (R AH) for a net debit in the $37.18 area. That is also the break even stock price for this trade. This covered call has a 74 day duration, provides 8.60% downside protection and a 7.58% assigned return rate for a 37.41% 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 R Jan '11 17.50 Call (VRV AW) and selling the Jan '10 40 call (R AH) for a $20.95 debit. The trade has a 74 day life and would provide 5.48% downside protection and a 7.40% assigned return rate for a 36.00% annualized return rate (for comparison purposes only). Ryder System has a current annual dividend yield of 2.40%. [ATU-Seven Summits Research]