Select Sector SPDR-Financial (XLF) 2/9/10 PriceWatch Alert Targets 13.02% Return
Posted: Tuesday, February 09, 2010 8:35 AM EDT
By: Market Intelligence Center Staff
Select Sector SPDR-Financial (PACF: XLF) closed yesterday at $13.66. So far XLF has hit a 52-week low of $5.88 and 52-week high of $15.76. XLF has been showing support around 13.43 and resistance in the 14.09 range. Technical indicators are Bearish. XLF appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Sep '10 13 covered call for a net debit in the $12.05 area. That is also the break even stock price for this trade. This covered call has a 221 day duration, provides 11.79% downside protection and a 7.88% assigned return rate for a 13.02% 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 XLF Jan '11 10 Call and selling the Sep '10 13 call for a $2.49 debit. The trade has a 221 day life and would provide 8.57% downside protection and a 20.48% assigned return rate for a 34.00% annualized return rate (for comparison purposes only). [ATU-Seven Summits Research]
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