UltraShort Real Estate ProShares (SRS) PriceWatch Alert Could Hit 20.08% Return

Posted: Monday, July 06, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

UltraShort Real Estate ProShares (PCX: SRS) closed yesterday at $21.05. So far SRS has hit a 52-week low of $16.78 and 52-week high of $295.72. SRS has been showing support around 19.36 and resistance in the 21.94 range. Technical indicators are Bearish. SRS appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Jan '10 14 covered call (SKW AN) for a net debit in the $12.65 area. That is also the break even stock price for this trade. This covered call has a 194 day duration, provides 39.90% downside protection and a 10.67% assigned return rate for a 20.08% 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 SRS Jan '11 7.50 Call (ZSS AU) and selling the Jan '10 14 call (SKW AN) for a $6.20 debit. The trade has a 194 day life and would provide 34.92% downside protection and a 4.84% assigned return rate for a 9.00% 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]