Fifth Third Bancorp (FITB) 11/3/09 PriceWatch Alert Could Hit 21.98% Return

Posted: Tuesday, November 03, 2009 8:02 AM EDT
By: Market Intelligence Center Staff

Fifth Third Bancorp (NasdaqNM: FITB) closed yesterday at $9.22. 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 8.57 and resistance in the 9.69 range. Technical indicators for the stock are Bearish 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 8 covered call (FTQ EH) for a net debit in the $7.14 area. That is also the break even stock price for this trade. This covered call has a 200 day duration, provides 22.56% downside protection and a 12.04% assigned return rate for a 21.98% 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 8 call (FTQ EH) for a $5.17 debit. The trade has a 200 day life and would provide 16.81% downside protection and a 6.38% assigned return rate for a 12.00% annualized return rate (for comparison purposes only). Fifth Third Bancorp has a current annual dividend yield of 0.43%. [ATU-Seven Summits Research]