MidCap SPDRs (MDY) 11/11/09 PriceWatch Alert Technicals Showing Bullish

Posted: Wednesday, November 11, 2009 8:45 AM EDT
By: Market Intelligence Center Staff

MidCap SPDRs (PCX: MDY) closed yesterday at $126.68. So far MDY has hit a 52-week low of $72.55 and 52-week high of $131.17. MDY has been showing support around 125.03 and resistance in the 128.11 range. Technical indicators are Bullish. MDY appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Jan '10 126 covered call (XTY AV) for a net debit in the $121.18 area. That is also the break even stock price for this trade. This covered call has a 66 day duration, provides 4.34% downside protection and a 3.98% assigned return rate for a 22.00% 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 MDY Jan '11 70 Call (OVW AR) and selling the Jan '10 126 call (XTY AV) for a $52.15 debit. The trade has a 66 day life and would provide 3.58% downside protection and a 7.38% assigned return rate for a 41.00% annualized return rate (for comparison purposes only). [WBA-Seven Summits Research]