Ingersoll Rand (IR) PriceWatch Alert for November 20, 2009

Posted: Friday, November 20, 2009 8:45 AM EDT
By: Market Intelligence Center Staff

Ingersoll Rand (NYSE: IR) closed yesterday at $36.38. So far the stock has hit a 52-week low of $11.46 and 52-week high of $37.60. Ingersoll Rand stock has been showing support around 35.58 and resistance in the 37.04 range. Technical indicators for the stock are Bullish and S&P gives IR a neutral 3 STAR (out of 5) hold rating. IR appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '10 35 covered call (IR AG) for a net debit in the $33.73 area. That is also the break even stock price for this trade. This covered call has a 57 day duration, provides 7.28% downside protection and a 3.77% assigned return rate for a 24.11% 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 IR Jan '11 17.50 Call (VSV AW) and selling the Jan '10 35 call (IR AG) for a $16.45 debit. The trade has a 57 day life and would provide 6.68% downside protection and a 6.38% assigned return rate for a 41.00% annualized return rate (for comparison purposes only). Ingersoll Rand has a current annual dividend yield of 0.77%. [FBB-Seven Summits Research]