Posted: Tuesday, April 21, 2015 8:00 AM ET
MarketIntelligenceCenter.com's patented algorithms have selected a trade on iShares S&P Smallcap 600 Index (IJR) that returns 20.48% in 269 days for an annualized return rate of 28%.
This diagonal spread pairs a short position in the Jan. '16 $115.00 call, with a long position in the Jan. '16 $100.00 for a net debit of about $12.45.
For a more conservative trade, a covered call using the same sold option yields 3.87% or 5.25% annualized. The net debit rises to $110.72, but the downside protection rises to 6.58%, compared to just 5.12% for the diagonal spread.
iShares S&P Smallcap 600 Index moved between $117.75 and $118.87 before closing at $118.52 on Monday. Support has been near $117.26 and resistance has been close to $119.50.
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