Bank of America (BAC) PriceWatch Alert for October 30, 2009

Posted: Friday, October 30, 2009 8:38 AM EDT

Bank of America (NYSE: BAC) closed yesterday at $15.73. So far the stock has hit a 52-week low of $2.53 and 52-week high of $24.62. Bank of America stock has been showing support around 14.83 and resistance in the 16.23 range. Technical indicators for the stock are Bearish and S&P gives BAC a very positive 5 STAR (out of 5) strong buy rating. BAC appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a May '10 14 covered call (BYO EN) for a net debit in the $12.58 area. That is also the break even stock price for this trade. This covered call has a 204 day duration, provides 20.03% downside protection and an 11.29% assigned return rate for a 20.20% 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 BAC Jan '11 5 Call (VBA AP) and selling the May '10 14 call (BYO EN) for a $7.80 debit. The trade has a 204 day life and would provide 18.63% downside protection and a 15.38% assigned return rate for a 28.00% annualized return rate (for comparison purposes only). Bank of America has a current annual dividend yield of 0.26%. [FBB-Seven Summits Research]

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