Banco Itau Holding Financeira (ITU) PriceWatch Alert Up To 35.66% Downside Protection

Posted: Friday, May 15, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

Banco Itau Holding Financeira (NYSE: ITU) closed yesterday at $13.74. So far the stock has hit a 52-week low of $6.70 and 52-week high of $24.63. Banco Itau Holding Financeira stock has been showing support around 13.15 and resistance in the 14.21 range. Technical indicators for the stock are Bullish and S&P gives ITU a neutral 3 STAR (out of 5) hold rating. ITU appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '10 10 covered call (ITU AB) for a net debit in the $8.84 area. That is also the break even stock price for this trade. This covered call has a 246 day duration, provides 35.66% downside protection and a 13.12% assigned return rate for a 19.47% 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 ITU Jan '10 7.50 Call (WVD AU) and selling the Jan '10 10 call (ITU AB) for a $1.85 debit. The trade has a 246 day life and would provide 31.95% downside protection and a 35.14% assigned return rate for a 52.00% annualized return rate (for comparison purposes only). Banco Itau Holding Financeira has a current annual dividend yield of 0.49%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]