iShares MSCI-South Korea Index Fund (EWY) 11/6/09 PriceWatch Alert At $41.31 Break Even

Posted: Friday, November 06, 2009 8:21 AM EDT

iShares MSCI-South Korea Index Fund (PCX: EWY) closed yesterday at $44.21. So far EWY has hit a 52-week low of $19.00 and 52-week high of $48.09. EWY has been showing support around 43.46 and resistance in the 44.66 range. Technical indicators are Bearish. EWY appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Jan '10 44 covered call (EHT AR) for a net debit in the $41.31 area. That is also the break even stock price for this trade. This covered call has a 71 day duration, provides 6.56% downside protection and a 6.51% assigned return rate for a 33.48% 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 EWY Jan '11 20 Call (XYW AT) and selling the Jan '10 44 call (EHT AR) for a $21.75 debit. The trade has a 71 day life and would provide 5.56% downside protection and a 10.34% assigned return rate for a 53.00% annualized return rate (for comparison purposes only). [FBB-Seven Summits Research]

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