Ryland Group (RYL) 11/18/09 PriceWatch Alert With $14.66 Break Even

Posted: Wednesday, November 18, 2009 8:43 AM EDT
By: Market Intelligence Center Staff

Ryland Group (NYSE: RYL) closed yesterday at $19.86. So far the stock has hit a 52-week low of $9.95 and 52-week high of $24.94. Ryland Group stock has been showing support around 19.26 and resistance in the 20.20 range. Technical indicators for the stock are Bearish and S&P gives RYL a neutral 3 STAR (out of 5) hold rating. RYL appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Apr '10 16 covered call (RGV DP) for a net debit in the $14.66 area. That is also the break even stock price for this trade. This covered call has a 150 day duration, provides 26.18% downside protection and a 9.14% assigned return rate for a 22.24% 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 RYL Jan '11 7.50 Call (ONG AU) and selling the Apr '10 16 call (RGV DP) for a $7.65 debit. The trade has a 150 day life and would provide 23.72% downside protection and an 11.11% assigned return rate for a 27.00% annualized return rate (for comparison purposes only). Ryland Group has a current annual dividend yield of 0.61%. [WBA-Seven Summits Research]