Bank of America (BAC) Showing Bullish Technicals But Could Fall Through $13.64 Support

Bank of America Corp (NYSE: BAC) closed Monday's trading session at $14.19. In the past year, the stock has hit a 52-week low of $10.91 and 52-week high of $19.86. Bank of America stock has been showing support around $13.64 and resistance in the $14.50 range. Technical indicators for the stock are Bullish and S&P gives BAC a neutral 3 STARS (out of 5) hold rating. For a hedged play on this stock, look at the Aug '11 $13.00 covered call for a net debit in the $11.88 area. That is also the break-even stock price for this trade. This covered call has a duration of 228 days, provides 16.28% downside protection and an assigned return rate of 9.43% for an annualized return rate of 15.09% (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 BAC Jan '12 $7.50 call and selling the Aug '11 $13.00 call for a total debit of $4.69. The trade has a lifespan of 228 days and would provide 14.09% downside protection and an assigned return rate of 17.27% for an annualized return rate of 28% (for comparison purposes only). Bank of America has a current annual dividend yield of 0.30%. [THA-Seven Summits Research]