United Parcel Service (UPS) Looking Gets Positive Rating On Investors Observer Analysts Favorites List

Posted: Monday, November 16, 2009 9:02 AM EDT
By: Market Intelligence Center Staff

United Parcel Service (NYSE: UPS) ended the last trading session at $56.69. So far the stock has hit a 52-week low of $37.99 and 52-week high of $59.63. United Parcel Service stock has been showing support around 56.27 and resistance in the 57.25 range. Technical indicators for the stock are Bullish and S&P gives UPS a neutral 3 STAR (out of 5) hold rating. UPS appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jan '10 60 covered call (UPS AL) for a net debit in the $55.77 area. That is also the break even stock price for this trade. This covered call has a 61 day duration, provides 1.62% downside protection and a 7.58% assigned return rate for a 45.38% 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 UPS Jan '11 45 Call (OPS AI) and selling the Jan '10 60 call (UPS AL) for a $12.53 debit. The trade has a 61 day life and would provide no downside protection and a 19.71% assigned return rate for an 118.00% annualized return rate (for comparison purposes only). United Parcel Service has a current annual dividend yield of 3.10%. [ABR-Seven Summits Research]