TCF Financial (TCB) 10/16/09 PriceWatch Alert With 19.16% Downside Protection

Posted: Friday, October 16, 2009 8:09 AM EDT
By: Market Intelligence Center Staff

TCF Financial (NYSE: TCB) closed yesterday at $14.35. So far the stock has hit a 52-week low of $8.74 and 52-week high of $19.24. TCF Financial stock has been showing support around 13.84 and resistance in the 14.98 range. Technical indicators for the stock are Bullish and S&P gives TCB a very positive 5 STAR (out of 5) strong buy rating. TCB appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at an Apr '10 12.50 covered call (TCB DV) for a net debit in the $11.60 area. That is also the break even stock price for this trade. This covered call has an 183 day duration, provides 19.16% downside protection and a 7.76% assigned return rate for a 15.47% 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 TCB Jan '11 5 Call (ZMZ AA) and selling the Apr '10 12.50 call (TCB DV) for a $6.90 debit. The trade has an 183 day life and would provide 17.07% downside protection and an 8.70% assigned return rate for a 17.00% annualized return rate (for comparison purposes only). TCF Financial has a current annual dividend yield of 1.43%. [FBB-Seven Summits Research]