Zions Bancorporation (ZION) Trading With Bearish Technicals On Heavy Volume

Posted: Friday, July 30, 2010 7:49 AM EDT

Zions Bancorporation (NASDAQ: ZION) closed yesterday at $22.05. So far the stock has hit a 52-week low of $12.50 and 52-week high of $30.29. Zions Bancorporation stock has been showing support around 21.28 and resistance in the 22.78 range. Technical indicators for the stock are Bearish and S&P gives ZION a neutral 3 STAR (out of 5) hold rating. ZION appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '11 20 covered call for a net debit in the $18.10 area. That is also the break even stock price for this trade. This covered call has a 176 day duration, provides 17.91% downside protection and a 10.50% assigned return rate for a 21.77% 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 ZION Jan '12 7.50 Call and selling the Jan '11 20 call for an $11.05 debit. The trade has a 176 day life and would provide 15.87% downside protection and a 13.12% assigned return rate for a 27.00% annualized return rate (for comparison purposes only). Zions Bancorporation has a current annual dividend yield of 0.19%. [FBB-Seven Summits Research]

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