MidCap SPDRs (MDY) PriceWatch Alert Targets 27.66% Return

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

MidCap SPDRs (PCX: MDY) closed yesterday at $103.06. So far MDY has hit a 52-week low of $72.55 and 52-week high of $151.24. MDY has been showing support around 101.69 and resistance in the 105.23 range. Technical indicators are Bullish. MDY appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Sep '09 103 covered call (DYJ IY) for a net debit in the $97.46 area. That is also the break even stock price for this trade. This covered call has a 75 day duration, provides 5.43% downside protection and a 5.68% assigned return rate for a 27.66% 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 MDY Jan '11 60 Call (OVW AM) and selling the Sep '09 103 call (DYJ IY) for a $39.55 debit. The trade has a 75 day life and would provide 3.41% downside protection and an 8.72% assigned return rate for a 42.00% 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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