BCE (BCE) Shows Bullish Technicals And Stock Trading On Heavy Volume

Posted: Friday, November 13, 2009 9:25 AM EDT

BCE (NYSE: BCE) closed yesterday at $25.72. So far the stock has hit a 52-week low of $16.85 and 52-week high of $31.71. BCE stock has been showing support around 25.37 and resistance in the 26.29 range. Technical indicators for the stock are Bullish and S&P gives BCE a neutral 3 STAR (out of 5) hold rating. BCE appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jun '10 25 covered call (BCE FE) for a net debit in the $23.92 area. That is also the break even stock price for this trade. This covered call has a 218 day duration, provides 7.00% downside protection and a 4.52% assigned return rate for a 7.56% 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 BCE Jan '11 20 Call (VFK AD) and selling the Jun '10 25 call (BCE FE) for a $4.25 debit. The trade has a 218 day life and would provide 5.72% downside protection and a 17.65% assigned return rate for a 30.00% annualized return rate (for comparison purposes only). BCE has a current annual dividend yield of 5.74%. [FBB-Seven Summits Research]

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