Intrepid Potash (IPI)

[CHA$E]

Intrepid Potash Trading Near $30.45 Resistance Level

Posted: Monday, June 20, 2011 8:44 AM EDT

Intrepid Potash (NYSE:IPI) closed Friday's unsure trading session at $29.01. In the past year, the stock has hit a 52-week low of $19.08 and 52-week high of $40.22. Intrepid Potash (IPI) stock has been showing support around $28.05 and resistance in the $30.45 range. Technical indicators for the stock are Bearish.

For a hedged play on Intrepid Potash (IPI), look at the Dec '11 $29.00 covered call for a net debit in the $25.41 area. That is also the break-even stock price for this trade. This covered call has a duration of 180 days, provides 12.41% downside protection and an assigned return rate of 14.13% for an annualized return rate of 28.65% (for comparison purposes only).

A lower-cost hedged play for Intrepid Potash (IPI) would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the Intrepid Potash (IPI) Jan '12 $25.00 call and selling the Dec '11 $29.00 call for a total debit of $2.60. The trade has a lifespan of 180 days and would provide 4.86% downside protection and an assigned return rate of 53.85% for an annualized return rate of 109% (for comparison purposes only). Intrepid Potash (IPI) does not pay dividends at this time.