streetTRACKS Gold Shares (GLD) 11/12/09 PriceWatch Alert Support At Around $108.73

Posted: Thursday, November 12, 2009 8:13 AM EDT
By: Market Intelligence Center Staff

streetTRACKS Gold Shares (PCX: GLD) closed yesterday at $109.60. So far GLD has hit a 52-week low of $68.81 and 52-week high of $109.71. GLD has been showing support around 108.73 and resistance in the 110.15 range. Technical indicators are Bullish. GLD appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Jan '10 109 covered call (GCZ AE) for a net debit in the $105.55 area. That is also the break even stock price for this trade. This covered call has a 65 day duration, provides 3.70% downside protection and a 3.27% assigned return rate for an 18.35% 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 GLD Jan '11 65 Call (OQA AM) and selling the Jan '10 109 call (GCZ AE) for a $41.80 debit. The trade has a 65 day life and would provide 2.55% downside protection and a 5.26% assigned return rate for a 30.00% annualized return rate (for comparison purposes only). [THA-Seven Summits Research]