D R Horton (DHI) 11/11/09 PriceWatch Alert Bearish Price Movement

Posted: Wednesday, November 11, 2009 8:16 AM EDT
By: Market Intelligence Center Staff

D R Horton (NYSE: DHI) closed yesterday at $11.69. So far the stock has hit a 52-week low of $3.79 and 52-week high of $13.90. D R Horton stock has been showing support around 11.10 and resistance in the 12.54 range. Technical indicators for the stock are Bearish and S&P gives DHI a positive 4 STAR (out of 5) buy rating. DHI appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a May '10 10 covered call (DHI EB) for a net debit in the $8.99 area. That is also the break even stock price for this trade. This covered call has a 192 day duration, provides 23.10% downside protection and an 11.23% assigned return rate for a 21.36% 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 DHI Jan '11 5 Call (VEI AA) and selling the May '10 10 call (DHI EB) for a $4.40 debit. The trade has a 192 day life and would provide 19.59% downside protection and a 13.64% assigned return rate for a 26.00% annualized return rate (for comparison purposes only). D R Horton has a current annual dividend yield of 1.24%. [WBA-Seven Summits Research]