United States Natural Gas (UNG) Trading Near $10.82 Support Level

United States Natural Gas (AMEX:UNG) closed Friday's positive trading session at $11.11. In the past year, the ETF has hit a 52-week low of $10.02 and 52-week high of $17.68. UNG has been showing support around $10.82 and resistance in the $11.34 range. Technical indicators for the ETF are Bearish. For a hedged play on this ETF, look at the Oct '11 $11.00 covered call for a net debit in the $9.76 area. That is also the break-even price for this trade. This covered call has a duration of 215 days, provides 12.15% downside protection and an assigned return rate of 12.70% for an annualized return rate of 21.57% (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 UNG Jan '12 $8.00 call and selling the Oct '11 $11.00 call for a total debit of $2.20. The trade has a lifespan of 215 days and would provide 8.19% downside protection and an assigned return rate of 36.36% for an annualized return rate of 62% (for comparison purposes only). UNG does not pay a distribution at this time.

(Source: http://www.marketintelligencecenter.com/analyfav/1260129)