iShares Dow Jones U.S. Real Estate Index Fund (IYR) 11/6/09 PriceWatch Alert Support At Around $40.20

Posted: Friday, November 06, 2009 8:25 AM EDT
By: Market Intelligence Center Staff

iShares Dow Jones U.S. Real Estate Index Fund (PCX: IYR) closed yesterday at $41.29. So far IYR has hit a 52-week low of $20.98 and 52-week high of $46.46. IYR has been showing support around 40.20 and resistance in the 41.92 range. Technical indicators are Bearish. IYR appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Jan '10 41 covered call (BJN AO) for a net debit in the $38.55 area. That is also the break even stock price for this trade. This covered call has a 71 day duration, provides 6.64% downside protection and a 6.36% assigned return rate for a 32.67% 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 IYR Jan '11 26 Call (ZVR AZ) and selling the Jan '10 41 call (BJN AO) for a $12.91 debit. The trade has a 71 day life and would provide 5.76% downside protection and a 16.19% assigned return rate for an 83.00% annualized return rate (for comparison purposes only). [FBB-Seven Summits Research]