Ultra S&P500 ProShares (SSO) PriceWatch Alert Up To 21.26% Return

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

Ultra S&P500 ProShares (PCX: SSO) closed yesterday at $24.86. So far SSO has hit a 52-week low of $14.16 and 52-week high of $64.33. SSO has been showing support around 24.31 and resistance in the 25.89 range. Technical indicators are Bearish. SSO appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Dec '09 22 covered call (SOJ LV) for a net debit in the $20.06 area. That is also the break even stock price for this trade. This covered call has a 166 day duration, provides 19.31% downside protection and a 9.67% assigned return rate for a 21.26% 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 SSO Jan '11 10 Call (ZFO AJ) and selling the Dec '09 22 call (SOJ LV) for a $10.70 debit. The trade has a 166 day life and would provide 16.73% downside protection and a 12.15% assigned return rate for a 27.00% 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]