Ultra QQQ ProShares (QLD) 11/18/09 PriceWatch Alert Down To $52.73 Break Even

Posted: Wednesday, November 18, 2009 8:11 AM EDT
By: Market Intelligence Center Staff

Ultra QQQ ProShares (PCX: QLD) closed yesterday at $56.43. So far QLD has hit a 52-week low of $19.46 and 52-week high of $56.60. QLD has been showing support around 55.26 and resistance in the 57.04 range. Technical indicators are Bullish. QLD appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Jan '10 56 covered call (QLH AD) for a net debit in the $52.73 area. That is also the break even stock price for this trade. This covered call has a 59 day duration, provides 6.56% downside protection and a 6.20% assigned return rate for a 38.36% 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 QLD Jan '11 19 Call (ZKV AS) and selling the Jan '10 56 call (QLH AD) for a $34.70 debit. The trade has a 59 day life and would provide 4.84% downside protection and a 6.63% assigned return rate for a 41.00% annualized return rate (for comparison purposes only). [WBA-Seven Summits Research]