Bank of America (BAC) 11/16/09 PriceWatch Alert Technicals Showing Bullish

Posted: Monday, November 16, 2009 8:26 AM EDT
By: Market Intelligence Center Staff

Bank of America (NYSE: BAC) ended the last trading session at $15.98. So far the stock has hit a 52-week low of $2.53 and 52-week high of $19.10. Bank of America stock has been showing support around 15.67 and resistance in the 16.35 range. Technical indicators for the stock are Bullish and S&P gives BAC a very positive 5 STAR (out of 5) strong buy rating. BAC appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a May '10 14 covered call (BYO EN) for a net debit in the $12.63 area. That is also the break even stock price for this trade. This covered call has an 187 day duration, provides 20.96% downside protection and a 10.85% assigned return rate for a 21.17% 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 BAC Jan '11 5 Call (VBA AP) and selling the May '10 14 call (BYO EN) for a $7.90 debit. The trade has an 187 day life and would provide 19.27% downside protection and a 13.92% assigned return rate for a 27.00% annualized return rate (for comparison purposes only). Bank of America has a current annual dividend yield of 0.24%. [ABR-Seven Summits Research]