SunTrust Banks (STI) PriceWatch Alert for November 19, 2009

Posted: Thursday, November 19, 2009 8:26 AM EDT
By: Market Intelligence Center Staff

SunTrust Banks (NYSE: STI) closed yesterday at $21.94. So far the stock has hit a 52-week low of $6.00 and 52-week high of $34.12. SunTrust Banks stock has been showing support around 21.12 and resistance in the 22.86 range. Technical indicators for the stock are Bullish and S&P gives STI a neutral 3 STAR (out of 5) hold rating. STI appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at an Apr '10 18 covered call (SFJ DO) for a net debit in the $16.59 area. That is also the break even stock price for this trade. This covered call has a 149 day duration, provides 24.38% downside protection and an 8.50% assigned return rate for a 20.82% 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 STI Jan '11 7.50 Call (VNJ AU) and selling the Apr '10 18 call (SFJ DO) for a $9.60 debit. The trade has a 149 day life and would provide 22.06% downside protection and a 9.38% assigned return rate for a 23.00% annualized return rate (for comparison purposes only). SunTrust Banks has a current annual dividend yield of 0.19%. [THA-Seven Summits Research]