Wisdomtree India Earnings (AMEX:EPI) closed Monday's uneventful trading session at $23.17. In the past year, the ETF has hit a 52-week low of $21.73 and 52-week high of $28.72. (EPI) has been showing support around $22.98 and resistance in the $23.48 range. Technical indicators for the ETF are Bearish. For a hedged play on this ETF, look at the Oct '11 $23.00 covered call for a net debit in the $21.72 area. That is also the break-even price for this trade. This covered call has a duration of 130 days, provides 6.26% downside protection and an assigned return rate of 5.89% for an annualized return rate of 16.55% (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 (EPI)Jan '12 $15.00 call and selling the Oct '11 $23.00 call for a total debit of $7.15. The trade has a lifespan of 130 days and would provide 4.40% downside protection and an assigned return rate of 11.89% for an annualized return rate of 33% (for comparison purposes only). (EPI) does not pay a distribution at this time.
