iShares Silver Trust (SLV) 11/13/09 PriceWatch Alert Could Hit 18.41% Return

Posted: Friday, November 13, 2009 8:09 AM EDT
By: Market Intelligence Center Staff

iShares Silver Trust (PCX: SLV) closed yesterday at $16.92. 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 16.67 and resistance in the 17.39 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 $14.84 area. That is also the break even stock price for this trade. This covered call has a 155 day duration, provides 12.29% downside protection and a 7.82% assigned return rate for an 18.41% 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 $6.22 debit. The trade has a 155 day life and would provide 10.05% downside protection and a 12.54% assigned return rate for a 30.00% annualized return rate (for comparison purposes only). [FBB-Seven Summits Research]