Diana Shipping (DSX) 11/13/09 PriceWatch Alert With 25.72% Downside Protection

Posted: Friday, November 13, 2009 8:23 AM EDT
By: Market Intelligence Center Staff

Diana Shipping (NYSE: DSX) closed yesterday at $15.55. So far the stock has hit a 52-week low of $6.85 and 52-week high of $19.00. Diana Shipping stock has been showing support around 14.89 and resistance in the 16.61 range. Technical indicators for the stock are Bullish. DSX appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jun '10 12.50 covered call (DSX FV) for a net debit in the $11.55 area. That is also the break even stock price for this trade. This covered call has a 218 day duration, provides 25.72% downside protection and an 8.23% assigned return rate for a 13.77% 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 DSX Jan '11 7.50 Call (XDJ AU) and selling the Jun '10 12.50 call (DSX FV) for a $4.70 debit. The trade has a 218 day life and would provide 21.54% downside protection and a 6.38% assigned return rate for an 11.00% annualized return rate (for comparison purposes only). Diana Shipping has a current annual dividend yield of 6.60%. [FBB-Seven Summits Research]