Diana Shipping (DSX) 11/17/09 PriceWatch Alert Targets 16.91% Downside Protection

Posted: Tuesday, November 17, 2009 8:21 AM EDT
By: Market Intelligence Center Staff

Diana Shipping (NYSE: DSX) closed yesterday at $16.85. 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 16.43 and resistance in the 17.21 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 Mar '10 15 covered call (DSX CC) for a net debit in the $14.00 area. That is also the break even stock price for this trade. This covered call has a 123 day duration, provides 16.91% downside protection and a 7.14% assigned return rate for a 21.20% 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 DSX Jan '11 2.50 Call (XDJ AZ) and selling the Mar '10 15 call (DSX CC) for an $11.60 debit. The trade has a 123 day life and would provide 16.32% downside protection and a 7.76% assigned return rate for a 23.00% annualized return rate (for comparison purposes only). Diana Shipping has a current annual dividend yield of 6.11%. [ATU-Seven Summits Research]