CurrencyShares Euro Trust (FXE) 10/21/09 PriceWatch Alert Support At Around $148.25

Posted: Wednesday, October 21, 2009 8:34 AM EDT

CurrencyShares Euro Trust (PCX: FXE) closed yesterday at $149.15. So far FXE has hit a 52-week low of $124.04 and 52-week high of $149.58. FXE has been showing support around 148.25 and resistance in the 150.03 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 Jan '10 149 covered call (FXE AS) for a net debit in the $145.75 area. That is also the break even stock price for this trade. This covered call has an 87 day duration, provides 2.28% downside protection and a 2.23% assigned return rate for a 9.36% 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 '11 115 Call (XXF AK) and selling the Jan '10 149 call (FXE AS) for a $31.60 debit. The trade has an 87 day life and would provide 1.71% downside protection and a 7.59% assigned return rate for a 32.00% annualized return rate (for comparison purposes only). [WBA-Seven Summits Research]

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