iShares Russell 2000 Value Index Fund (IWN) 11/3/09 PriceWatch Alert Targets 6.08% Downside Protection

Posted: Tuesday, November 03, 2009 8:46 AM EDT
By: Market Intelligence Center Staff

iShares Russell 2000 Value Index Fund (PCX: IWN) closed yesterday at $52.59. So far IWN has hit a 52-week low of $31.55 and 52-week high of $59.30. IWN has been showing support around 50.70 and resistance in the 54.46 range. Technical indicators are Bearish. IWN appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Jan '10 52 covered call (ITV AZ) for a net debit in the $49.39 area. That is also the break even stock price for this trade. This covered call has a 74 day duration, provides 6.08% downside protection and a 5.28% assigned return rate for a 26.07% 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 IWN Jan '11 30 Call (ZSH AD) and selling the Jan '10 52 call (ITV AZ) for a $19.90 debit. The trade has a 74 day life and would provide 5.12% downside protection and a 10.55% assigned return rate for a 52.00% annualized return rate (for comparison purposes only). [ATU-Seven Summits Research]