Ryder System (R) 11/10/09 PriceWatch Alert At $37.72 Break Even

Posted: Tuesday, November 10, 2009 8:04 AM EDT
By: Market Intelligence Center Staff

Ryder System (NYSE: R) closed yesterday at $43.52. 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 41.94 and resistance in the 44.44 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 May '10 42.50 covered call (R ER) for a net debit in the $37.72 area. That is also the break even stock price for this trade. This covered call has a 193 day duration, provides 13.33% downside protection and a 12.67% assigned return rate for a 23.97% 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 27.50 Call (VRV AY) and selling the May '10 42.50 call (R ER) for an $11.75 debit. The trade has a 193 day life and would provide 9.81% downside protection and a 27.66% assigned return rate for a 52.00% annualized return rate (for comparison purposes only). Ryder System has a current annual dividend yield of 2.36%. [ATU-Seven Summits Research]