SPDR Gold Shares (AMEX:GLD) closed Wednesday's volatile trading session at $149.81. In the past year, the ETF has hit a 52-week low of $113.08 and 52-week high of $153.61. GLD has been showing support around $148.75 and resistance in the $150.91 range. Technical indicators for the ETF are Bullish. For a hedged play on this ETF, look at the Aug '11 $158.00 covered call for a net debit in the $148.26 area. That is also the break-even price for this trade. This covered call has a duration of 72 days, provides 1.03% downside protection and an assigned return rate of 6.57% for an annualized return rate of 33.30% (for comparison purposes only). A lower-cost hedged play for this ETF would use a longer term call option in place of the covered call ETF purchase. To use this strategy look at going long the GLD Jan '12 $139.00 call and selling the Aug '11 $158.00 call for a total debit of $13.35. The trade has a lifespan of 72 days and would provide -1.70% downside protection and an assigned return rate of 42.32% for an annualized return rate of 215% (for comparison purposes only). GLD does not pay a distribution at this time. [ABR-Seven Summits Research]

Source