Dicks Sporting Goods (DKS) 11/3/09 PriceWatch Alert Down To $19.01 Break Even

Posted: Tuesday, November 03, 2009 8:39 AM EDT
By: Market Intelligence Center Staff

Dicks Sporting Goods (NYSE: DKS) closed yesterday at $23.61. So far the stock has hit a 52-week low of $9.21 and 52-week high of $26.00. Dicks Sporting Goods stock has been showing support around 22.25 and resistance in the 24.33 range. Technical indicators for the stock are Bullish and S&P gives DKS a neutral 3 STAR (out of 5) hold rating. DKS appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Mar '10 20 covered call (DKS CD) for a net debit in the $19.01 area. That is also the break even stock price for this trade. This covered call has a 137 day duration, provides 19.48% downside protection and a 5.21% assigned return rate for a 13.87% 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 DKS Jan '11 7.50 Call (VYI AU) and selling the Mar '10 20 call (DKS CD) for an $11.70 debit. The trade has a 137 day life and would provide 18.68% downside protection and a 6.84% assigned return rate for an 18.00% annualized return rate (for comparison purposes only). Dicks Sporting Goods does not pay dividends at this time. [ATU-Seven Summits Research]