Late last week, with the news of a meeting between the leaders of Germany, France, and Greece to discuss EU finance, CCI bought a lot of the double short financials (SKF). It seems when political based meetings are scheduled, market expectations are rarely met and the market falls. CCI figured a meeting of three countries politicians represented a great likelihood of disappointment. Surpise, surprise...CCI was wrong. That meeting and the following financial news from Europe was well received and this position took a big hit.
In fact, CCI was starting to draft a post about our first loss using double shorts, but then realized that both President Obama's speech on how to pay for the jobs bill and Ben Bernakes potential "twist" announcement were scheduled for early this week. (if you don't know what "the twist" is...don't ask...lol). Hence, I thought one (or both) of these events was likely to disappoint the market and drop financial stocks so I held onto the short position. Surprise, surprise ....disappointment has generally reigned on both these events and Moodys piled on with some bank downgrades. SKF went wild at the end of the day (up 9.5%)
CCI closed the position for "just" a net gain of 1.25% today. Frankly, this is not a great win, as the position was held too long for this investment vehicle, and hence was quite risky. But.... at the end of the day a win, is a win, is a win.
11-0-5 hedging via double shorts this year.