Fifth Third Bancorp (FITB) 10/16/09 PriceWatch Alert Up To 22.11% Return

Posted: Friday, October 16, 2009 8:04 AM EDT
By: Market Intelligence Center Staff

Fifth Third Bancorp (NasdaqNM: FITB) closed yesterday at $10.55. So far the stock has hit a 52-week low of $1.01 and 52-week high of $13.44. Fifth Third Bancorp stock has been showing support around 9.96 and resistance in the 10.84 range. Technical indicators for the stock are Bullish and S&P gives FITB a neutral 3 STAR (out of 5) hold rating. FITB appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a May '10 9 covered call (FTQ EI) for a net debit in the $7.95 area. That is also the break even stock price for this trade. This covered call has a 218 day duration, provides 24.64% downside protection and a 13.21% assigned return rate for a 22.11% 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 FITB Jan '11 2.50 Call (OJH AZ) and selling the May '10 9 call (FTQ EI) for a $5.60 debit. The trade has a 218 day life and would provide 23.22% downside protection and a 16.07% assigned return rate for a 27.00% annualized return rate (for comparison purposes only). Fifth Third Bancorp has a current annual dividend yield of 0.39%. [FBB-Seven Summits Research]