NutriSystem (NTRI) Down Slightly Yesterday And Trading In Tight Support/Resistance Range

NutriSystem (NasdaqNM: NTRI) closed yesterday at $17.05. So far the stock has hit a 52-week low of $10.01 and 52-week high of $18.68. NutriSystem stock has been showing support around 16.78 and resistance in the 17.44 range. Technical indicators for the stock are Bullish. NTRI appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Mar '10 15 covered call (NSI CC) for a net debit in the $13.65 area. That is also the break even stock price for this trade. This covered call has a 158 day duration, provides 19.94% downside protection and a 9.89% assigned return rate for a 22.85% 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 NTRI Jan '11 7.50 Call (XFQ AU) and selling the Mar '10 15 call (NSI CC) for a $6.55 debit. The trade has a 158 day life and would provide 17.60% downside protection and a 14.50% assigned return rate for a 34.00% annualized return rate (for comparison purposes only). NutriSystem has a current annual dividend yield of 4.19%.

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