Pharmaceutical HOLDRS (PPH) PriceWatch Alert With $53.31 Break Even

Pharmaceutical HOLDRS (AMEX: PPH) ended the last trading session at $58.71. So far PPH has hit a 52-week low of $49.28 and 52-week high of $72.49. PPH has been showing support around 56.97 and resistance in the 59.59 range. Technical indicators are Bullish. PPH appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Nov '09 55 covered call (PPH KK) for a net debit in the $53.31 area. That is also the break even stock price for this trade. This covered call has a 173 day duration, provides 9.20% downside protection and a 3.17% assigned return rate for a 6.69% 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 PPH Jan '10 45 Call (WIG AI) and selling the Nov '09 55 call (PPH KK) for an $8.50 debit. The trade has a 173 day life and would provide 8.87% downside protection and a 17.65% assigned return rate for a 37.00% annualized return rate

Pharmaceutical HOLDRS (PPH) PriceWatch Alert Up To 8.82% Return

Pharmaceutical HOLDRS closed yesterday at $57.89. So far PPH has hit a 52-week low of $49.28 and 52-week high of $72.49. PPH has been showing support around 56.16 and resistance in the 59.04 range. Technical indicators are Bullish. PPH appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at an Aug '09 55 covered call (PPH HK) for a net debit in the $53.69 area. That is also the break even stock price for this trade. This covered call has a 101 day duration, provides 7.26% downside protection and a 2.44% assigned return rate for an 8.82% 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 PPH Jan '10 40 Call (WIG AH) and selling the Aug '09 55 call (PPH HK) for a $13.80 debit. The trade has a 101 day life and would provide 7.07% downside protection and an 8.70% assigned return rate for a 31.00% annualized return rate (for comparison purposes only).