streetTRACKS Gold Shares (GLD) PriceWatch Alert With $87.65 Break Even

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

streetTRACKS Gold Shares (PCX: GLD) closed yesterday at $91.25. So far GLD has hit a 52-week low of $66.00 and 52-week high of $98.99. GLD has been showing support around 90.80 and resistance in the 91.80 range. Technical indicators are Neutral. GLD appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Sep '09 91 covered call (GLD IM) for a net debit in the $87.65 area. That is also the break even stock price for this trade. This covered call has a 75 day duration, provides 3.95% downside protection and a 3.82% assigned return rate for an 18.60% 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 GLD Jan '11 60 Call (OQA AH) and selling the Sep '09 91 call (GLD IM) for a $29.55 debit. The trade has a 75 day life and would provide 1.86% downside protection and a 4.91% assigned return rate for a 24.00% 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]