Diana Shipping (DSX) 11/3/09 PriceWatch Alert Targets 16.22% Return

Posted: Tuesday, November 03, 2009 8:37 AM EDT
By: Market Intelligence Center Staff

Diana Shipping (NYSE: DSX) closed yesterday at $12.78. 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 12.09 and resistance in the 13.41 range. Technical indicators for the stock are Bearish. DSX appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jun '10 10 covered call (DSX FB) for a net debit in the $9.08 area. That is also the break even stock price for this trade. This covered call has a 228 day duration, provides 28.95% downside protection and a 10.13% assigned return rate for a 16.22% 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 Jun '10 10 call (DSX FB) for a $7.15 debit. The trade has a 228 day life and would provide 24.49% downside protection and a 4.90% assigned return rate for an 8.00% annualized return rate (for comparison purposes only). Diana Shipping has a current annual dividend yield of 7.10%. [ATU-Seven Summits Research]