PNC Financial (PNC) 11/20/09 PriceWatch Alert Bullish Price Movement

Posted: Friday, November 20, 2009 8:38 AM EDT
By: Market Intelligence Center Staff

PNC Financial (NYSE: PNC) closed yesterday at $55.24. So far the stock has hit a 52-week low of $16.20 and 52-week high of $57.50. PNC Financial stock has been showing support around 54.35 and resistance in the 56.41 range. Technical indicators for the stock are Bullish and S&P gives PNC a positive 4 STAR (out of 5) buy rating. PNC appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jan '10 50 covered call (PNC AJ) for a net debit in the $48.24 area. That is also the break even stock price for this trade. This covered call has a 57 day duration, provides 12.67% downside protection and a 3.65% assigned return rate for a 23.36% 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 PNC Jan '11 15 Call (VSM AC) and selling the Jan '10 50 call (PNC AJ) for a $33.30 debit. The trade has a 57 day life and would provide 12.56% downside protection and a 5.11% assigned return rate for a 33.00% annualized return rate (for comparison purposes only). PNC Financial has a current annual dividend yield of 0.72%. [FBB-Seven Summits Research]