Wachovia Capital Trust (WB) PriceWatch Alert Could Hit 22.71% Return

Posted on Monday, September 22, 2008 8:07 AM

Wachovia Capital Trust (NYSE: WB) ended the last trading session at $18.75. 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 12.06 and resistance in the 27.34 range. Technical indicators for the stock are Bullish 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 a Jan '09 14 covered call (WB AP) for a net debit in the $13.05 area. That is also the break even stock price for this trade. This covered call has an 117 day duration, provides 30.40% downside protection and a 7.28% assigned return rate for a 22.71% 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 Jan '09 14 call (WB AP) for a $10.25 debit. The trade has an 117 day life and would provide 32.00% downside protection and a 12.20% assigned return rate for a 38.00% annualized return rate (for comparison purposes only). Wachovia Capital Trust has a current annual dividend yield of 2.19%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]