Dillards (DDS) 11/20/09 PriceWatch Alert Support At Around $13.82

Posted: Friday, November 20, 2009 8:36 AM EDT
By: Market Intelligence Center Staff

Dillards (NYSE: DDS) closed yesterday at $14.28. So far the stock has hit a 52-week low of $2.50 and 52-week high of $15.72. Dillards stock has been showing support around 13.82 and resistance in the 14.66 range. Technical indicators for the stock are Bullish and S&P gives DDS a weak 2 STAR (out of 5) sell rating. DDS appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a May '10 12.50 covered call (DDS EV) for a net debit in the $11.28 area. That is also the break even stock price for this trade. This covered call has an 183 day duration, provides 21.01% downside protection and a 10.82% assigned return rate for a 21.57% 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 DDS Jan '11 5 Call (OSU AA) and selling the May '10 12.50 call (DDS EV) for a $7.15 debit. The trade has an 183 day life and would provide 14.92% downside protection and a 4.90% assigned return rate for a 10.00% annualized return rate (for comparison purposes only). Dillards has a current annual dividend yield of 1.10%. [FBB-Seven Summits Research]