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Potential PACCAR (PCAR) Trade Has 3.45% Downside Protection

Nov 10, 2017 ( via COMTEX) --

For a hedged play on PACCAR (<a href="">PCAR</a>) MarketIntelligenceCenter.comaEUR(TM)s algorithms selected the Jan 19, 2018 $69.40 covered call for a net debit in the $67.01 area. That is also the break-even stock price for the covered call. This trade will return 3.55%, or 18.51% annualized (for comparison purposes only), in 70 days. This covered call also provides 3.45% downside protection. A lower-cost play on PACCAR would use a longer term call option in place of the long position in the stock. Look at the Jan 18, 2019 $46.90 call and the same sold call for a net debit of $21.15.This trade only has 1.97% downside protection, but the assigned return rate rises to A6.38% or an annualized rate of 33.28% (for comparison purposes only). The current 52-week low is $58.12 and the 52-week high is $75.68. PACCAR stock has been showing support around $68.31 and resistance in the $70.93 range. The stock closed Nov 9, 2017's trading session at $69.41. Technical indicators for the stock are bearish and S&P gives PCAR a 4 STARS (out of 5) buy ranking.

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