CurrencyShares Euro Trust (FXE) PriceWatch Alert Down To $137.56 Break Even

Posted: Monday, August 17, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

CurrencyShares Euro Trust (PCX: FXE) closed yesterday at $141.86. So far FXE has hit a 52-week low of $124.04 and 52-week high of $149.33. FXE has been showing support around 140.94 and resistance in the 143.10 range. Technical indicators are Bullish. FXE appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Dec '09 141 covered call (FXE LK) for a net debit in the $137.56 area. That is also the break even stock price for this trade. This covered call has a 124 day duration, provides 3.03% downside protection and a 2.50% assigned return rate for a 7.36% 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 FXE Jan '11 110 Call (XXF AF) and selling the Dec '09 141 call (FXE LK) for a $29.05 debit. The trade has a 124 day life and would provide 1.98% downside protection and a 6.71% assigned return rate for a 20.00% 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]