BB&T (BBT) 11/6/09 PriceWatch Alert Up To 13.84% Downside Protection

Posted: Friday, November 06, 2009 8:40 AM EDT
By: Market Intelligence Center Staff

BB&T (NYSE: BBT) closed yesterday at $24.57. So far the stock has hit a 52-week low of $12.90 and 52-week high of $34.70. BB&T stock has been showing support around 23.44 and resistance in the 25.18 range. Technical indicators for the stock are Bearish and S&P gives BBT a positive 4 STAR (out of 5) buy rating. BBT appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Mar '10 23 covered call (BBT CW) for a net debit in the $21.17 area. That is also the break even stock price for this trade. This covered call has a 134 day duration, provides 13.84% downside protection and an 8.64% assigned return rate for a 23.55% 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 BBT Jan '11 12.50 Call (ZLS AV) and selling the Mar '10 23 call (BBT CW) for an $8.70 debit. The trade has a 134 day life and would provide 13.72% downside protection and a 20.69% assigned return rate for a 56.00% annualized return rate (for comparison purposes only). BB&T has a current annual dividend yield of 2.41%. [FBB-Seven Summits Research]