Oshkosh Truck (OSK) 11/4/09 PriceWatch Alert With Support Around $31.63

Posted: Wednesday, November 04, 2009 8:41 AM EDT
By: Market Intelligence Center Staff

Oshkosh Truck (NYSE: OSK) closed yesterday at $35.29. So far the stock has hit a 52-week low of $3.85 and 52-week high of $35.94. Oshkosh Truck stock has been showing support around 31.63 and resistance in the 37.33 range. Technical indicators for the stock are Bullish and S&P gives OSK a very positive 5 STAR (out of 5) strong buy rating. OSK appears on the Investors Observer Stocks In The News list. OSK reported earnings Tuesday, posting a fourth-quarter profit of $140.3 million, or $1.68 per share. Excluding one-time items, OSK earned 27 cents per share on revenue of $1.48 billion, topping analysts' projections of 16 cents per share on revenue of $1.40 billion. For a hedged play on this stock, look at a Jan '10 30 covered call (OSK AF) for a net debit in the $28.29 area. That is also the break even stock price for this trade. This covered call has a 73 day duration, provides 19.84% downside protection and a 6.04% assigned return rate for a 30.22% 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 OSK Jan '11 15 Call (VSZ AC) and selling the Jan '10 30 call (OSK AF) for a $14.70 debit. The trade has a 73 day life and would provide 15.84% downside protection and a 2.04% assigned return rate for a 10.00% annualized return rate (for comparison purposes only). Oshkosh Truck does not pay dividends at this time. [WBA-Seven Summits Research]