RESEARCH NOTES

DIAMONDS Trust, Series 1 (DIA)

Monday, August 11, 2008, 10:49 AM ET

Bullish Factors: Bullish daily MACD, The stock is in the short and intermediate-term upward trend, Support at 116.28, Average P/E (13.41), Average P/S (1.07), Program trading buy orders at 113.70 after Jul 18, Implied volatility (19.30%) < Historical volatility (22.56%), Trading volumes go up after Jun 30, Unusually high option trading volumes for Sep 101-120 Calls/Puts; Stock reacted adequately on the latest positive news (see the chart above)
Bearish Factors: daily and weekly Stochastic Oscillator overbought, Resistance at 120.0, Average P/B (2.87),

OUR RECOMMENDATION: STRONG BUY RECOMMENDED TRADING VEHICLE: Open Debit Call Spread: Buy to Open DIAJB DIA Oct 106 Call IV 20.8 Delta 0.88 Sell to Open DIAJG DIA Oct 111 Call IV 20.3 Delta 0.75 Debit 4.00 Position Net Delta .13 Max Gain 1.00 Max Risk 4.00 Target Credit 4.40 Click here or the detailed Research Note (in PDF format)