iShares Lehman 20+ Year Treasury Bond Fund (TLT) 2/9/10 PriceWatch Alert Bullish Price Movement

Posted: Tuesday, February 09, 2010 8:41 AM EDT
By: Market Intelligence Center Staff

iShares Lehman 20+ Year Treasury Bond Fund (PACF: TLT) closed yesterday at $92.10. So far TLT has hit a 52-week low of $87.56 and 52-week high of $108.07. TLT has been showing support around 91.47 and resistance in the 92.47 range. Technical indicators are Bullish. TLT appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Jun '10 92 covered call for a net debit in the $89.69 area. That is also the break even stock price for this trade. This covered call has a 130 day duration, provides 2.62% downside protection and a 2.58% assigned return rate for a 7.23% 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 TLT Jan '11 85 Call and selling the Jun '10 92 call for a $5.54 debit. The trade has a 130 day life and would provide 1.69% downside protection and a 26.35% assigned return rate for a 74.00% annualized return rate (for comparison purposes only). [ATU-Seven Summits Research]