iShares Silver Trust (SLV) PriceWatch Alert for November 6, 2009

Posted: Friday, November 06, 2009 8:44 AM EDT

iShares Silver Trust (PCX: SLV) closed yesterday at $17.12. So far SLV has hit a 52-week low of $8.69 and 52-week high of $17.64. SLV has been showing support around 16.97 and resistance in the 17.29 range. Technical indicators are Bullish. SLV appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at an Apr '10 16 covered call (SLV DP) for a net debit in the $14.83 area. That is also the break even stock price for this trade. This covered call has a 162 day duration, provides 13.38% downside protection and a 7.89% assigned return rate for a 17.78% 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 SLV Jan '11 9 Call (XUX AI) and selling the Apr '10 16 call (SLV DP) for a $6.21 debit. The trade has a 162 day life and would provide 11.16% downside protection and a 12.72% assigned return rate for a 29.00% annualized return rate (for comparison purposes only). [FBB-Seven Summits Research]

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