United States Natural Gas Fund, LP (UNG) PriceWatch Alert With $9.11 Break Even

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

United States Natural Gas Fund, LP (PCX: UNG) closed yesterday at $13.11. So far UNG has hit a 52-week low of $12.69 and 52-week high of $63.33. UNG has been showing support around 12.56 and resistance in the 13.94 range. Technical indicators are Bearish. UNG appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Jan '10 10 covered call (UNY AJ) for a net debit in the $9.11 area. That is also the break even stock price for this trade. This covered call has a 194 day duration, provides 30.51% downside protection and a 9.77% assigned return rate for an 18.38% 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 UNG Jan '11 5 Call (ZZM AE) and selling the Jan '10 10 call (UNY AJ) for a $4.70 debit. The trade has a 194 day life and would provide 26.01% downside protection and a 6.38% assigned return rate for a 12.00% 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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