US Bancorp (USB) 11/10/09 PriceWatch Alert Up To 20.41% Return

Posted: Tuesday, November 10, 2009 8:36 AM EDT
By: Market Intelligence Center Staff

US Bancorp (NYSE: USB) closed yesterday at $24.51. So far the stock has hit a 52-week low of $8.06 and 52-week high of $29.90. US Bancorp stock has been showing support around 23.43 and resistance in the 25.07 range. Technical indicators for the stock are Bullish and S&P gives USB a neutral 3 STAR (out of 5) hold rating. USB appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jun '10 24 covered call (UEE FA) for a net debit in the $21.36 area. That is also the break even stock price for this trade. This covered call has a 221 day duration, provides 12.85% downside protection and a 12.36% assigned return rate for a 20.41% 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 USB Jan '11 15 Call (VBG AC) and selling the Jun '10 24 call (UEE FA) for a $7.20 debit. The trade has a 221 day life and would provide 9.42% downside protection and a 25.00% assigned return rate for a 41.00% annualized return rate (for comparison purposes only). US Bancorp has a current annual dividend yield of 0.83%. [ATU-Seven Summits Research]