TCF Financial (TCB) 10/22/09 PriceWatch Alert Bearish Price Movement

Posted: Thursday, October 22, 2009 8:09 AM EDT
By: Market Intelligence Center Staff

TCF Financial (NYSE: TCB) closed yesterday at $12.97. 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 11.88 and resistance in the 14.46 range. Technical indicators for the stock are Bearish 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 $11.32 area. That is also the break even stock price for this trade. This covered call has a 177 day duration, provides 12.72% downside protection and a 10.42% assigned return rate for a 21.50% 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 a 177 day life and would provide 8.25% downside protection and an 8.70% assigned return rate for an 18.00% annualized return rate (for comparison purposes only). TCF Financial has a current annual dividend yield of 1.40%. [THA-Seven Summits Research]