UltraShort S&P500 ProShares (SDS) 2/9/10 PriceWatch Alert With 11.05% Downside Protection
Posted: Tuesday, February 09, 2010 8:40 AM EDT
By: Market Intelligence Center Staff
UltraShort S&P500 ProShares (PACF: SDS) closed yesterday at $38.46. So far SDS has hit a 52-week low of $32.79 and 52-week high of $118.24. SDS has been showing support around 37.03 and resistance in the 39.21 range. Technical indicators are Bullish. SDS appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Jun '10 38 covered call for a net debit in the $34.21 area. That is also the break even stock price for this trade. This covered call has a 130 day duration, provides 11.05% downside protection and an 11.08% assigned return rate for a 31.11% 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 SDS Jan '11 25 Call and selling the Jun '10 38 call for a $9.85 debit. The trade has a 130 day life and would provide 9.39% downside protection and a 31.98% assigned return rate for a 90.00% annualized return rate (for comparison purposes only). [ATU-Seven Summits Research]
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