Potential Reliance Steel and Aluminum (RS) 12/09/2010 Trade Has 7.55% Downside Protection

Reliance Steel & Aluminum Co （NYSE: RS） closed Wednesday's trading session at $49.03. In the past year, the stock has hit a 52-week low of $34.58 and 52-week high of $55.47. Reliance Steel and Aluminum stock has been showing support around $47.82 and resistance in the $51.26 range.

Technical indicators for the stock are Bullish and S&P gives RS a positive 4 STARS （out of 5） buy rating. For a hedged play on this stock, look at the Mar '11 $49.00 covered call for a net debit in the $45.33 area. That is also the break-even stock price for this trade. This covered call has a duration of 100 days, provides 7.55% downside protection and an assigned return rate of 8.10% for an annualized return rate of 29.55% （for comparison purposes only）. Reliance Steel and Aluminum has a current annual dividend yield of 0.80%.