Silver Trust (AMEX:SLV) closed Monday's favorable trading session at $29.77. In the past year, the ETF has hit a 52-week low of $20.73 and 52-week high of $48.35. Silver Trust (SLV) has been showing support around $26.48 and resistance in the $31.64 range. Technical indicators for the ETF are Bearish. For a hedged play on Silver Trust (SLV), look at the Jul '12 $30.00 covered call for a net debit in the $24.47 area. That is also the break-even price for this trade. This covered call has a duration of 298 days, provides 17.80% downside protection and an assigned return rate of 22.60% for an annualized return rate of 27.68% (for comparison purposes only). A lower-cost hedged play for Silver Trust (SLV) would use a longer term call option in place of the covered call ETF purchase. To use this strategy look at going long the Silver Trust (SLV) Jan '13 $22.00 call and selling the Jul '12 $30.00 call for a total debit of $5.30. The trade has a lifespan of 298 days and would provide 8.30% downside protection and an assigned return rate of 50.94% for an annualized return rate of 62.4% (for comparison purposes only). Silver Trust (SLV) has a current trailing average distribution yield of 0%. [THA-Seven Summits Research]

Source