Zions Bancorporation (ZION) 10/23/09 PriceWatch Alert Targets 21.69% Return

Posted: Friday, October 23, 2009 8:25 AM EDT

Zions Bancorporation (NasdaqNM: ZION) closed yesterday at $17.38. So far the stock has hit a 52-week low of $5.90 and 52-week high of $45.00. Zions Bancorporation stock has been showing support around 16.03 and resistance in the 18.11 range. Technical indicators for the stock are Bullish and S&P gives ZION a neutral 3 STAR (out of 5) hold rating. ZION appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Apr '10 15 covered call (ZNQ DC) for a net debit in the $13.58 area. That is also the break even stock price for this trade. This covered call has a 176 day duration, provides 21.86% downside protection and a 10.46% assigned return rate for a 21.69% 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 ZION Jan '11 5 Call (OIO AA) and selling the Apr '10 15 call (ZNQ DC) for an $8.70 debit. The trade has a 176 day life and would provide 21.17% downside protection and a 14.94% assigned return rate for a 31.00% annualized return rate (for comparison purposes only). Zions Bancorporation has a current annual dividend yield of 0.23%. [FBB-Seven Summits Research]

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