Ultra S&P500 ProShares (SSO) 2/9/10 PriceWatch Alert Up To 10.48% Downside Protection
Posted: Tuesday, February 09, 2010 8:41 AM EDT
By: Market Intelligence Center Staff
Ultra S&P500 ProShares (PACF: SSO) closed yesterday at $34.35. So far SSO has hit a 52-week low of $14.16 and 52-week high of $40.77. SSO has been showing support around 33.64 and resistance in the 35.64 range. Technical indicators are Bearish. SSO appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Jun '10 34 covered call for a net debit in the $30.75 area. That is also the break even stock price for this trade. This covered call has a 130 day duration, provides 10.48% downside protection and a 10.57% assigned return rate for a 29.67% 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 SSO Jan '11 18 Call and selling the Jun '10 34 call for a $13.70 debit. The trade has a 130 day life and would provide 7.71% downside protection and a 16.79% assigned return rate for a 47.00% annualized return rate (for comparison purposes only). [ATU-Seven Summits Research]
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