RadioShack (RSH) 11/11/09 PriceWatch Alert Technicals Showing Bullish

Posted: Wednesday, November 11, 2009 8:46 AM EDT
By: Market Intelligence Center Staff

RadioShack (NYSE: RSH) closed yesterday at $19.52. So far the stock has hit a 52-week low of $6.47 and 52-week high of $20.57. RadioShack stock has been showing support around 18.86 and resistance in the 20.58 range. Technical indicators for the stock are Bullish and S&P gives RSH a weak 2 STAR (out of 5) sell rating. RSH appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Apr '10 17.50 covered call (RSH DW) for a net debit in the $16.22 area. That is also the break even stock price for this trade. This covered call has a 157 day duration, provides 16.91% downside protection and a 7.89% assigned return rate for an 18.35% 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 RSH Jan '11 5 Call (VJY AA) and selling the Apr '10 17.50 call (RSH DW) for a $12.05 debit. The trade has a 157 day life and would provide 12.65% downside protection and a 3.73% assigned return rate for a 9.00% annualized return rate (for comparison purposes only). RadioShack has a current annual dividend yield of 1.23%. [WBA-Seven Summits Research]