CurrencyShares Euro Trust (FXE) 11/4/09 PriceWatch Alert Technicals Showing Neutral

Posted: Wednesday, November 04, 2009 8:42 AM EDT

CurrencyShares Euro Trust (PCX: FXE) closed yesterday at $146.93. So far FXE has hit a 52-week low of $124.59 and 52-week high of $150.31. FXE has been showing support around 145.77 and resistance in the 147.75 range. Technical indicators are Neutral. FXE appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Mar '10 146 covered call (FXE CP) for a net debit in the $141.73 area. That is also the break even stock price for this trade. This covered call has a 136 day duration, provides 3.54% downside protection and a 3.01% assigned return rate for an 8.09% 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 Mar '10 146 call (FXE CP) for a $28.45 debit. The trade has a 136 day life and would provide 2.37% downside protection and an 8.96% assigned return rate for a 24.00% annualized return rate (for comparison purposes only). [WBA-Seven Summits Research]

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