Ryder System (R) 11/19/09 PriceWatch Alert Up To 23.61% Return

Posted: Thursday, November 19, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

Ryder System (NYSE: R) closed yesterday at $43.28. 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 42.61 and resistance in the 43.79 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 $37.98 area. That is also the break even stock price for this trade. This covered call has an 184 day duration, provides 12.25% downside protection and an 11.90% assigned return rate for a 23.61% 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 25 Call (VRV AE) and selling the May '10 42.50 call (R ER) for a $14.25 debit. The trade has an 184 day life and would provide 9.31% downside protection and a 22.81% assigned return rate for a 45.00% annualized return rate (for comparison purposes only). Ryder System has a current annual dividend yield of 2.28%. [THA-Seven Summits Research]