PNC Financial (PNC) PriceWatch Alert With 15.42% Downside Protection

Posted: Friday, June 26, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

PNC Financial (NYSE: PNC) closed yesterday at $40.22. So far the stock has hit a 52-week low of $16.20 and 52-week high of $87.99. PNC Financial stock has been showing support around 38.55 and resistance in the 41.13 range. Technical indicators for the stock are Bearish and S&P gives PNC a neutral 3 STAR (out of 5) hold rating. PNC appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Nov '09 39 covered call (PZH KB) for a net debit in the $34.02 area. That is also the break even stock price for this trade. This covered call has a 148 day duration, provides 15.42% downside protection and a 14.64% assigned return rate for a 36.10% 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 PNC Jan '11 12.50 Call (VSM AV) and selling the Nov '09 39 call (PZH KB) for a $21.90 debit. The trade has a 148 day life and would provide 14.47% downside protection and a 21.00% assigned return rate for a 52.00% annualized return rate (for comparison purposes only). PNC Financial has a current annual dividend yield of 1.02%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]