Ryder System (R) 11/13/09 PriceWatch Alert Support At Around $41.92

Posted: Friday, November 13, 2009 8:02 AM EDT
By: Market Intelligence Center Staff

Ryder System (NYSE: R) closed yesterday at $43.00. 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 41.92 and resistance in the 45.04 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 $37.40 area. That is also the break even stock price for this trade. This covered call has a 190 day duration, provides 13.02% downside protection and a 13.64% assigned return rate for a 26.20% 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 a $12.50 debit. The trade has a 190 day life and would provide 6.98% downside protection and a 20.00% assigned return rate for a 38.00% annualized return rate (for comparison purposes only). Ryder System has a current annual dividend yield of 2.29%. [FBB-Seven Summits Research]