Ultra Basic Materials ProShares (UYM) 11/19/09 PriceWatch Alert Support Down To $31.21

Posted: Thursday, November 19, 2009 8:38 AM EDT
By: Market Intelligence Center Staff

Ultra Basic Materials ProShares (PCX: UYM) closed yesterday at $32.34. So far UYM has hit a 52-week low of $7.85 and 52-week high of $33.12. UYM has been showing support around 31.21 and resistance in the 33.69 range. Technical indicators are Bullish. UYM appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a May '10 29 covered call (UUZ EC) for a net debit in the $25.24 area. That is also the break even stock price for this trade. This covered call has an 184 day duration, provides 21.95% downside protection and a 14.90% assigned return rate for a 29.55% 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 UYM Jan '11 12 Call (XYU AF) and selling the May '10 29 call (UUZ EC) for a $14.45 debit. The trade has an 184 day life and would provide 18.21% downside protection and a 17.65% assigned return rate for a 35.00% annualized return rate (for comparison purposes only). [THA-Seven Summits Research]