Wachovia Capital Trust (WB) PriceWatch Alert Shows Bearish Technicals

Posted: Friday, September 19, 2008 8:07 AM EDT
By: Market Intelligence Center Staff

Wachovia Capital Trust (NYSE: WB) closed yesterday at $14.50. So far the stock has hit a 52-week low of $7.80 and 52-week high of $52.25. Wachovia Capital Trust stock has been showing support around 7.62 and resistance in the 18.44 range. Technical indicators for the stock are Bearish and S&P gives WB a neutral 3 STAR (out of 5) hold rating. WB appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Apr '09 12 covered call (WB DN) for a net debit in the $10.70 area. That is also the break even stock price for this trade. This covered call has a 211 day duration, provides 26.21% downside protection and a 12.15% assigned return rate for a 21.02% 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 WB Jan '10 2.50 Call (WVD AZ) and selling the Apr '09 12 call (WB DN) for an $8.55 debit. The trade has a 211 day life and would provide 23.79% downside protection and an 11.11% assigned return rate for a 19.00% annualized return rate (for comparison purposes only). Wachovia Capital Trust has a current annual dividend yield of 1.87%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]