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Bank Of America

February 11, 2011 by staff 

Bank Of America, Bank of America (NYSE: BAC) closed Thursday’s session flat trading and 14.49. In the past year, the stock has hit a low of 10.91 to 52 weeks and 52 weeks of high and 19.86. Bank of America stock has been showing support around 14.36 and resistance and the beach and 14.70. 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 August ’11 14.00-covered call for a net debit in the area and 12.88. It is also the share price breakeven for this trade. This covered call has duration of 190 days, has a downside protection and an 11.11% assigned return rate of 8.70% for an annualized return of 16.70% (for comparison). A low cost covered play for this stock would use an option to purchase long term instead of the stock covered call. To use this strategy look at going long the BAC in January ’12 and 10.00 call and the sale of August ’11 and 14.00 call for a total rate of $ 3.44. Trade has a lifespan of 190 days and provides a downside protection and a 7.25% assigned return rate of 16.28% for an annualized return of 31% (for comparison). Bank of America has a current annual dividend yield of 0.27%.
We see 30 years fixed rate home loan interest-free by 4.9%, which is slightly lower than 5% yesterday. That said many owners could compare Bank of America mortgage refinance rates in hopes of saving money by going to the refinancing process in February 2011.

Before making any assumption that all Americans can lock in 30 years fixed mortgage rates below 5%, it is important to recognize that we need a very impressive financial history to qualify for lower interest rates. By having a credit score above 740, a home equity loan and a debt / income ratio below 40% many homeowners will be well positioned to block low rates.

Default on the Bank of America Plaza is “imminent,” according to a recent report by Fitch Ratings.

He said the 55-storey tower, the largest in the Southeast, has been given to a particular service company that will manage the default process.

“It’s a great location and a very good product, but you cannot pay too much and borrowing too much and expect to get away with it,” said Emory University professor Jim Grissett estate. But that’s exactly what happened in 2006, Grissett said, when Los Angeles-based BentleyForbes bought the skyscraper in 2006. The company has paid and 436-million.

“It was a high price and debt was probably unsustainable.”

Grissett said the service company will not close the doors of the building, but to work to increase rental rates or otherwise to Bank of America more attractive to tenants Plaza.

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