Select Sector SPDR-Materials (XLB) 2/9/10 PriceWatch Alert Support At Around $29.46
Posted: Tuesday, February 09, 2010 8:44 AM EDT
By: Market Intelligence Center Staff
Select Sector SPDR-Materials (PACF: XLB) closed yesterday at $29.99. So far XLB has hit a 52-week low of $17.83 and 52-week high of $35.38. XLB has been showing support around 29.46 and resistance in the 30.98 range. Technical indicators are Bearish. XLB appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Jun '10 29 covered call for a net debit in the $27.28 area. That is also the break even stock price for this trade. This covered call has a 130 day duration, provides 9.04% downside protection and a 6.30% assigned return rate for a 17.70% 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 XLB Jan '11 22 Call and selling the Jun '10 29 call for a $6.04 debit. The trade has a 130 day life and would provide 6.50% downside protection and a 15.89% assigned return rate for a 45.00% annualized return rate (for comparison purposes only). [ATU-Seven Summits Research]
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