iShares Russell 2000 Index Fund has hit a 52-week low of $34.26 and 52-week high of $76.27. IWM has been showing support around 54.86 and resistance in the 58.32 range. IWM appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Nov '09 56 covered call for a net debit in the $52.71 area.
That is also the break even stock price for this trade. This covered call has a 96 day duration, provides 6.56% downside protection and a 6.24% assigned return rate for a 23.73% annualized return rate . 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 IWM Jan '11 35 Call and selling the Nov '09 56 call for an $18.85 debit. The trade has a 96 day life and would provide 4.54% downside protection and an 11.41% assigned return rate for a 43.00% annualized return rate
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