UltraShort QQQ ProShares (QID) 11/3/09 PriceWatch Alert Support At Around $22.91

Posted: Tuesday, November 03, 2009 8:36 AM EDT
By: Market Intelligence Center Staff

UltraShort QQQ ProShares (PCX: QID) closed yesterday at $23.97. So far QID has hit a 52-week low of $21.24 and 52-week high of $102.60. QID has been showing support around 22.91 and resistance in the 25.07 range. Technical indicators are Bullish. QID appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at an Apr '10 22 covered call (QOI DV) for a net debit in the $19.87 area. That is also the break even stock price for this trade. This covered call has a 165 day duration, provides 17.10% downside protection and a 10.72% assigned return rate for a 23.71% 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 QID Jan '11 12 Call (ZVT AL) and selling the Apr '10 22 call (QOI DV) for an $8.10 debit. The trade has a 165 day life and would provide 16.15% downside protection and a 23.46% assigned return rate for a 52.00% annualized return rate (for comparison purposes only). [ATU-Seven Summits Research]