J B Hunt (JBHT) 11/18/09 PriceWatch Alert Targets 13.42% Downside Protection

Posted: Wednesday, November 18, 2009 8:30 AM EDT
By: Market Intelligence Center Staff

J B Hunt (NasdaqNM: JBHT) closed yesterday at $33.52. So far the stock has hit a 52-week low of $18.14 and 52-week high of $34.78. J B Hunt stock has been showing support around 32.87 and resistance in the 34.07 range. Technical indicators for the stock are Bullish and S&P gives JBHT a positive 4 STAR (out of 5) buy rating. JBHT appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Feb '10 30 covered call (JHQ BF) for a net debit in the $29.02 area. That is also the break even stock price for this trade. This covered call has a 94 day duration, provides 13.42% downside protection and a 3.38% assigned return rate for a 13.11% 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 JBHT Jan '11 15 Call (ZOR AC) and selling the Feb '10 30 call (JHQ BF) for a $14.35 debit. The trade has a 94 day life and would provide 12.44% downside protection and a 4.53% assigned return rate for an 18.00% annualized return rate (for comparison purposes only). J B Hunt has a current annual dividend yield of 1.36%. [WBA-Seven Summits Research]