SPDR Homebuilders ETF (XHB) 11/20/09 PriceWatch Alert Technicals Showing Neutral

Posted: Friday, November 20, 2009 8:12 AM EDT
By: Market Intelligence Center Staff

SPDR Homebuilders ETF (PCX: XHB) closed yesterday at $14.83. So far XHB has hit a 52-week low of $8.00 and 52-week high of $16.75. XHB has been showing support around 14.43 and resistance in the 15.29 range. Technical indicators are Neutral. XHB appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Mar '10 14 covered call (XXJ CN) for a net debit in the $13.14 area. That is also the break even stock price for this trade. This covered call has a 120 day duration, provides 11.40% downside protection and a 6.54% assigned return rate for a 19.91% 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 XHB Jan '11 7.50 Call (XJL AU) and selling the Mar '10 14 call (XXJ CN) for a $5.91 debit. The trade has a 120 day life and would provide 9.58% downside protection and a 9.98% assigned return rate for a 30.00% annualized return rate (for comparison purposes only). [FBB-Seven Summits Research]