Comerica (CMA) 11/20/09 PriceWatch Alert Down To $23.17 Break Even

Posted: Friday, November 20, 2009 8:45 AM EDT
By: Market Intelligence Center Staff

Comerica (NYSE: CMA) closed yesterday at $28.07. So far the stock has hit a 52-week low of $11.72 and 52-week high of $32.30. Comerica stock has been showing support around 27.22 and resistance in the 29.48 range. Technical indicators for the stock are Neutral and S&P gives CMA a positive 4 STAR (out of 5) buy rating. CMA appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Apr '10 25 covered call (CMA DE) for a net debit in the $23.17 area. That is also the break even stock price for this trade. This covered call has a 148 day duration, provides 17.46% downside protection and a 7.90% assigned return rate for a 19.48% 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 CMA Jan '11 12.50 Call (ZCK AV) and selling the Apr '10 25 call (CMA DE) for an $11.40 debit. The trade has a 148 day life and would provide 14.86% downside protection and a 9.65% assigned return rate for a 24.00% annualized return rate (for comparison purposes only). Comerica has a current annual dividend yield of 0.70%. [FBB-Seven Summits Research]