Express Scripts (ESRX) 11/3/09 PriceWatch Alert Up To 35.79% Return

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

Express Scripts (NasdaqNM: ESRX) closed yesterday at $82.95. So far the stock has hit a 52-week low of $42.75 and 52-week high of $83.26. Express Scripts stock has been showing support around 78.52 and resistance in the 85.38 range. Technical indicators for the stock are Bullish and S&P gives ESRX a very positive 5 STAR (out of 5) strong buy rating. ESRX appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Jan '10 85 covered call (XTQ AA) for a net debit in the $79.25 area. That is also the break even stock price for this trade. This covered call has a 74 day duration, provides 4.46% downside protection and a 7.26% assigned return rate for a 35.79% 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 ESRX Jan '11 45 Call (VTW AI) and selling the Jan '10 85 call (XTQ AA) for a $35.65 debit. The trade has a 74 day life and would provide 2.77% downside protection and a 12.20% assigned return rate for a 60.00% annualized return rate (for comparison purposes only). Express Scripts does not pay dividends at this time. [ATU-Seven Summits Research]