Retail HOLDRS (RTH) 11/6/09 PriceWatch Alert Bullish Price Movement
Posted: Friday, November 06, 2009 8:23 AM EDT
By: Market Intelligence Center Staff
Retail HOLDRS (AMEX: RTH) closed yesterday at $91.46. So far RTH has hit a 52-week low of $60.23 and 52-week high of $93.96. RTH has been showing support around 88.71 and resistance in the 92.89 range. Technical indicators are Bullish. RTH appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Jan '10 90 covered call (RTH AR) for a net debit in the $87.26 area. That is also the break even stock price for this trade. This covered call has a 71 day duration, provides 4.59% downside protection and a 3.14% assigned return rate for a 16.14% 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 RTH Jan '11 60 Call (ZJS AL) and selling the Jan '10 90 call (RTH AR) for a $27.95 debit. The trade has a 71 day life and would provide 3.84% downside protection and a 7.33% assigned return rate for a 38.00% annualized return rate (for comparison purposes only). [FBB-Seven Summits Research]
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