Sunday, August 21, 2011

Downgrade Portfolio Update

As discussed in previous posts, CCI established 7 trading positions in the past week around the S&P downgrade of the US.  The plan/hope is that it will prove profitable over the mid-term to have bought at such a fearful time (or at least that is the theory!).   The google document at the link below will track these 7 trades.
 Downgrade portfolio

A few highlights/lowlights from this week.
  • The naked put sale of the Japanese ETF expired worthless, thereby generating the small amount of income as planned. 
  • With Waste Management closing Friday's trading at $29.40, the naked put sale was assigned and we are the proud owner of a lot of  Waste Management shares at an effective cost of $29.30.  Not in a rush to get rid of this stock as it is now paying a 4.6% dividend, but if option volatility remains high we will likely look to write a covered call against this position to try to add to the income stream.
  • Most of the other positions are not too changed despite all the noise of the week except for the Bank of New York which is down.  Still believe that this somewhat unique bank stock is caught in the down draft of more traditional banks that have with a more risky position in the industry, but as of now this is a loser.
 Updates on these 7 positions will come out periodically. There are several other established trades that took a beating this week.  CCI will be sorting through the damage and determining next steps on these trades over the next several days.

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