State Street (STT) 11/20/09 PriceWatch Alert With $37.39 Break Even

Posted: Friday, November 20, 2009 8:35 AM EDT
By: Market Intelligence Center Staff

State Street (NYSE: STT) closed yesterday at $41.69. So far the stock has hit a 52-week low of $14.43 and 52-week high of $55.87. State Street stock has been showing support around 40.24 and resistance in the 43.72 range. Technical indicators for the stock are Bearish and S&P gives STT a very positive 5 STAR (out of 5) strong buy rating. STT appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Feb '10 41 covered call (SPJ BA) for a net debit in the $37.39 area. That is also the break even stock price for this trade. This covered call has a 92 day duration, provides 10.31% downside protection and a 9.65% assigned return rate for a 38.31% 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 STT Jan '11 20 Call (OLD AD) and selling the Feb '10 41 call (SPJ BA) for an $18.45 debit. The trade has a 92 day life and would provide 7.77% downside protection and a 13.82% assigned return rate for a 55.00% annualized return rate (for comparison purposes only). State Street has a current annual dividend yield of 0.10%. [FBB-Seven Summits Research]