Zions Bancorporation (ZION) 10/27/09 PriceWatch Alert Shows Bearish Technicals

Posted: Tuesday, October 27, 2009 8:29 AM EDT

Zions Bancorporation (NasdaqNM: ZION) closed yesterday at $15.65. 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 14.71 and resistance in the 17.33 range. Technical indicators for the stock are Bearish 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 13 covered call (ZNQ DM) for a net debit in the $11.75 area. That is also the break even stock price for this trade. This covered call has a 172 day duration, provides 24.92% downside protection and a 10.64% assigned return rate for a 22.58% 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 2.50 Call (OIO AZ) and selling the Apr '10 13 call (ZNQ DM) for a $9.95 debit. The trade has a 172 day life and would provide 20.45% downside protection and a 5.53% assigned return rate for a 12.00% annualized return rate (for comparison purposes only). Zions Bancorporation has a current annual dividend yield of 0.23%. [ATU-Seven Summits Research]

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