PowerShares DB Agriculture Fund (DBA) PriceWatch Alert With $23.61 Break Even

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

PowerShares DB Agriculture Fund (PCX: DBA) closed yesterday at $25.06. So far DBA has hit a 52-week low of $21.52 and 52-week high of $42.16. DBA has been showing support around 24.83 and resistance in the 25.49 range. Technical indicators are Bearish. DBA appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at an Oct '09 25 covered call (DBA JY) for a net debit in the $23.61 area. That is also the break even stock price for this trade. This covered call has a 103 day duration, provides 5.79% downside protection and a 5.89% assigned return rate for a 20.86% 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 DBA Jan '11 15 Call (ZBV AO) and selling the Oct '09 25 call (DBA JY) for a $9.05 debit. The trade has a 103 day life and would provide 4.03% downside protection and a 10.50% assigned return rate for a 37.00% 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]