M and T Bank (MTB) PriceWatch Alert Targets 11.91% Downside Protection

Posted on Monday, September 08, 2008 8:07 AM

M and T Bank (NYSE: MTB) ended the last trading session at $73.91. So far the stock has hit a 52-week low of $53.61 and 52-week high of $110.40. M and T Bank stock has been showing support around 67.18 and resistance in the 77.46 range. Technical indicators for the stock are Bullish and S&P gives MTB a weak 2 STAR (out of 5) sell rating. MTB appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jan '09 70 covered call (MTB AN) for a net debit in the $65.11 area. That is also the break even stock price for this trade. This covered call has a 131 day duration, provides 11.91% downside protection and a 7.51% assigned return rate for a 20.93% 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 MTB Jan '10 35 Call (YMT AG) and selling the Jan '09 70 call (MTB AN) for a $30.75 debit. The trade has a 131 day life and would provide 11.04% downside protection and a 13.82% assigned return rate for a 39.00% annualized return rate (for comparison purposes only). M and T Bank has a current annual dividend yield of 3.84%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]