United Parcel Service (UPS) Flat Yesterday And Is Trading Just Below Its 52 Week High

United Parcel Service (NYSE: UPS) closed yesterday at $54.37. So far the stock has hit a 52-week low of $37.99 and 52-week high of $59.63. United Parcel Service stock has been showing support around 53.72 and resistance in the 55.40 range. Technical indicators for the stock are Bearish and S&P gives UPS a neutral 3 STAR (out of 5) hold rating. UPS appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Dec '09 55 covered call (UPS LK) for a net debit in the $52.77 area. That is also the break even stock price for this trade. This covered call has a 51 day duration, provides 2.94% downside protection and a 4.23% assigned return rate for a 30.24% 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 UPS Jan '11 40 Call (OPS AH) and selling the Dec '09 55 call (UPS LK) for a $13.50 debit. The trade has a 51 day life and would provide 1.60% downside protection and an 11.11% assigned return rate for an 80.00% annualized return rate (for comparison purposes only). United Parcel Service has a current annual dividend yield of 3.30%.

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