UltraShort Financials ProShares (SKF) 11/9/09 PriceWatch Alert Bullish Price Movement

Posted: Monday, November 09, 2009 8:42 AM EDT
By: Market Intelligence Center Staff

UltraShort Financials ProShares (PCX: SKF) ended the last trading session at $26.02. So far SKF has hit a 52-week low of $22.36 and 52-week high of $303.82. SKF has been showing support around 25.33 and resistance in the 27.05 range. Technical indicators are Bullish. SKF appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at an Apr '10 22 covered call (FFW DV) for a net debit in the $19.92 area. That is also the break even stock price for this trade. This covered call has a 159 day duration, provides 23.44% downside protection and a 10.44% assigned return rate for a 23.97% 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 SKF Jan '11 5 Call (ZDF AE) and selling the Apr '10 22 call (FFW DV) for a $16.20 debit. The trade has a 159 day life and would provide 18.52% downside protection and a 4.94% assigned return rate for an 11.00% annualized return rate (for comparison purposes only). [ABR-Seven Summits Research]