PNC Financial (PNC) 11/2/09 PriceWatch Alert Up To 11.03% Downside Protection

Posted: Monday, November 02, 2009 8:08 AM EDT

PNC Financial (NYSE: PNC) ended the last trading session at $48.94. So far the stock has hit a 52-week low of $16.20 and 52-week high of $74.68. PNC Financial stock has been showing support around 46.73 and resistance in the 53.15 range. Technical indicators for the stock are Bullish and S&P gives PNC a positive 4 STAR (out of 5) buy rating. PNC appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jan '10 47 covered call (PZH AV) for a net debit in the $43.54 area. That is also the break even stock price for this trade. This covered call has a 75 day duration, provides 11.03% downside protection and a 7.95% assigned return rate for a 38.67% 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 PNC Jan '11 15 Call (VSM AC) and selling the Jan '10 47 call (PZH AV) for a $29.30 debit. The trade has a 75 day life and would provide 9.48% downside protection and a 9.22% assigned return rate for a 45.00% annualized return rate (for comparison purposes only). PNC Financial has a current annual dividend yield of 0.81%. [ABR-Seven Summits Research]

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