Sunday, May 22, 2011


BB&T (BBT), a Winston-Salem, North Carolina regional Bank BB&T (NYSE:BBT) closed Wednesday's bullish trading session at $27.07. In the past year, the stock has hit a 52-week low of $21.72 and 52-week high of $33.02. BB&T stock has been showing support around $26.84 and resistance in the $27.24 range. Technical indicators for the stock are Bearish and S&P gives BBT a neutral 3 STARS (out of 5) hold rating. For a hedged play on this stock, look at the Sep '11 $27.00 covered call for a net debit in the $25.66 area. That is also the break-even stock price for this trade. This covered call has a duration of 121 days, provides 5.21% downside protection and an assigned return rate of 5.22% for an annualized return rate of 15.75% (for 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 BBT Jan '12 $22.50 call and selling the Sep '11 $27.00 call for a total debit of $3.79. The trade has a lifespan of 121 days and would provide 2.88% downside protection and an assigned return rate of 18.73% for an annualized return rate of 57% (for comparison purposes only). BB&T has a current annual dividend yield of 2.25%.
BB&T (BBT) Could Break Through $27.24 Resistance Level
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