May 14, 2013 (Marketintelligencecenter.com via COMTEX) -- Homebuilders (AMEX:XHB) closed Monday's trading session at $31.92. In the past year, the ETF has hit a 52-week low of $18.93 and 52-week high of $32.03. Homebuilders (XHB) has been showing support around $31.65 and resistance in the $32.17 range. Technical indicators for the ETF are Bullish. For a hedged play on Homebuilders (XHB), look at the Dec '13 $29.00 covered call for a net debit in the $27.92 area. That is also the break-even price for this trade. This covered call has a duration of 221 days, provides 12.53% downside protection and an assigned return rate of 3.87% for an annualized return rate of 6.39% (for comparison purposes only). A lower-cost hedged play for Homebuilders (XHB) would use a longer term call option in place of the covered call ETF purchase. To use this strategy look at going long the Homebuilders (XHB) Jan '14 $22.50 call and selling the Dec '13 $29.00 call for a total debit of $4.90. The trade has a lifespan of 221 days and would provide 14.16% downside protection and an assigned return rate of 32.65% for an annualized return rate of 54% (for comparison purposes only). Homebuilders (XHB) has a current trailing average distribution yield of 0%.
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As of Friday, 05-10-2013 23:59, the latest Comtex SmarTrendA? Alert,
an automated pattern recognition system, indicated an UPTREND on
10-27-2011 for XHB @ $16.95.
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