Select Sector SPDR-Technology (XLK) 2/8/10 PriceWatch Alert Support Down To $20.56

Posted: Monday, February 08, 2010 8:38 AM EDT
By: Market Intelligence Center Staff

Select Sector SPDR-Technology (PACF: XLK) ended the last trading session at $21.07. So far XLK has hit a 52-week low of $13.08 and 52-week high of $23.30. XLK has been showing support around 20.56 and resistance in the 21.36 range. Technical indicators are Bearish. XLK appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Jun '10 21 covered call for a net debit in the $19.92 area. That is also the break even stock price for this trade. This covered call has a 131 day duration, provides 5.46% downside protection and a 5.42% assigned return rate for a 15.11% 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 XLK Jan '11 17 Call and selling the Jun '10 21 call for a $3.45 debit. The trade has a 131 day life and would provide 2.94% downside protection and a 15.94% assigned return rate for a 44.00% annualized return rate (for comparison purposes only). [ABR-Seven Summits Research]