Ryder System (R) 11/20/09 PriceWatch Alert Bullish Price Movement

Posted: Friday, November 20, 2009 8:15 AM EDT
By: Market Intelligence Center Staff

Ryder System (NYSE: R) closed yesterday at $42.22. 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 41.27 and resistance in the 43.51 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 Jan '10 40 covered call (R AH) for a net debit in the $38.32 area. That is also the break even stock price for this trade. This covered call has a 57 day duration, provides 9.24% downside protection and a 4.38% assigned return rate for a 28.07% 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 22.50 Call (VRV AX) and selling the Jan '10 40 call (R AH) for a $16.80 debit. The trade has a 57 day life and would provide 6.92% downside protection and a 4.17% assigned return rate for a 27.00% annualized return rate (for comparison purposes only). Ryder System has a current annual dividend yield of 2.32%. [FBB-Seven Summits Research]