ITT Educational Services (ESI) Traded In The Red Yesterday On High Volume

Posted: Tuesday, November 10, 2009 9:09 AM EDT
By: Market Intelligence Center Staff

ITT Educational Services (NYSE: ESI) closed yesterday at $93.59. So far the stock has hit a 52-week low of $70.33 and 52-week high of $133.75. ITT Educational Services stock has been showing support around 90.20 and resistance in the 96.52 range. Technical indicators for the stock are Bearish. ESI appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '10 90 covered call (ENJ AR) for a net debit in the $85.19 area. That is also the break even stock price for this trade. This covered call has a 67 day duration, provides 8.98% downside protection and a 5.65% assigned return rate for a 30.76% 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 ESI Jan '11 40 Call (ZAQ AH) and selling the Jan '10 90 call (ENJ AR) for a $46.90 debit. The trade has a 67 day life and would provide 7.15% downside protection and a 6.61% assigned return rate for a 36.00% annualized return rate (for comparison purposes only). ITT Educational Services does not pay dividends at this time. [ATU-Seven Summits Research]