Banco Bradesco (BBD) 11/3/09 PriceWatch Alert Up To 10.63% Return

Posted: Tuesday, November 03, 2009 8:34 AM EDT
By: Market Intelligence Center Staff

Banco Bradesco (NYSE: BBD) closed yesterday at $19.81. So far the stock has hit a 52-week low of $7.40 and 52-week high of $21.99. Banco Bradesco stock has been showing support around 18.92 and resistance in the 20.86 range. Technical indicators for the stock are Bullish. BBD appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jun '10 17.50 covered call (BBD FW) for a net debit in the $16.41 area. That is also the break even stock price for this trade. This covered call has a 228 day duration, provides 17.16% downside protection and a 6.64% assigned return rate for a 10.63% 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 BBD Jan '11 10 Call (XSJ AB) and selling the Jun '10 17.50 call (BBD FW) for a $7.00 debit. The trade has a 228 day life and would provide 14.18% downside protection and a 7.14% assigned return rate for an 11.00% annualized return rate (for comparison purposes only). Banco Bradesco has a current annual dividend yield of 0.47%. [ATU-Seven Summits Research]