UltraShort QQQ ProShares (QID) PriceWatch Alert With Support Around $32.08

Posted: Monday, July 06, 2009 8:07 AM EDT

UltraShort QQQ ProShares (PCX: QID) closed yesterday at $33.33. So far QID has hit a 52-week low of $30.86 and 52-week high of $102.60. QID has been showing support around 32.08 and resistance in the 34.14 range. Technical indicators are Bearish. QID appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Jan '10 33 covered call (QOI AG) for a net debit in the $28.13 area. That is also the break even stock price for this trade. This covered call has a 194 day duration, provides 15.60% downside protection and a 17.31% assigned return rate for a 32.57% 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 QID Jan '11 12 Call (ZVT AL) and selling the Jan '10 33 call (QOI AG) for a $16.25 debit. The trade has a 194 day life and would provide 15.24% downside protection and a 29.23% assigned return rate for a 55.00% annualized return rate (for comparison purposes only). [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]

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