Fifth Third Bancorp (FITB) 10/26/09 PriceWatch Alert Support Down To $9.85

Posted: Monday, October 26, 2009 8:14 AM EDT

Fifth Third Bancorp (NasdaqNM: FITB) ended the last trading session at $10.34. So far the stock has hit a 52-week low of $1.01 and 52-week high of $12.95. Fifth Third Bancorp stock has been showing support around 9.85 and resistance in the 11.15 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 $7.99 area. That is also the break even stock price for this trade. This covered call has a 208 day duration, provides 22.73% downside protection and a 12.64% assigned return rate for a 22.18% 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 $5.80 debit. The trade has a 208 day life and would provide 19.73% downside protection and a 12.07% assigned return rate for a 21.00% annualized return rate (for comparison purposes only). Fifth Third Bancorp has a current annual dividend yield of 0.40%. [ABR-Seven Summits Research]

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