Select Sector SPDR-Financial (XLF) PriceWatch Alert for July 6, 2009

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

Select Sector SPDR-Financial (PCX: XLF) closed yesterday at $11.47. So far XLF has hit a 52-week low of $5.88 and 52-week high of $24.50. XLF has been showing support around 11.23 and resistance in the 11.89 range. Technical indicators are Bearish. XLF appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Jan '10 11 covered call (YUW AK) for a net debit in the $9.87 area. That is also the break even stock price for this trade. This covered call has a 194 day duration, provides 13.95% downside protection and an 11.45% assigned return rate for a 21.54% 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 XLF Jan '11 6 Call (VKP AF) and selling the Jan '10 11 call (YUW AK) for a $4.30 debit. The trade has a 194 day life and would provide 10.20% downside protection and a 16.28% assigned return rate for a 31.00% 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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