Diamonds Trust, Series 1 (DIA) 11/20/09 PriceWatch Alert Support At Around $102.33

Posted: Friday, November 20, 2009 8:29 AM EDT
By: Market Intelligence Center Staff

Diamonds Trust, Series 1 (PCX: DIA) closed yesterday at $103.65. So far DIA has hit a 52-week low of $64.78 and 52-week high of $104.64. DIA has been showing support around 102.33 and resistance in the 104.73 range. Technical indicators are Bullish. DIA appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Jan '10 103 covered call (DIA AY) for a net debit in the $100.50 area. That is also the break even stock price for this trade. This covered call has a 57 day duration, provides 3.04% downside protection and a 2.49% assigned return rate for a 15.93% 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 DIA Jan '11 70 Call (ZAV AR) and selling the Jan '10 103 call (DIA AY) for a $30.85 debit. The trade has a 57 day life and would provide 2.70% downside protection and a 6.97% assigned return rate for a 45.00% annualized return rate (for comparison purposes only). [FBB-Seven Summits Research]