In 2012 CCI will be merging those two portfolios into one global portfolio. The portfolio plans
- to continue to hold the 7 country etfs described in those funds
- to add in several other country funds
- to more actively trade/hedge this portfolio than done in 2011
At the start of 2012, the portfolio is long one lot of EEM at an effective price of $38.33, and one lot of naked Jan 6 (weekly) $38 puts. Building on this position over the past two days:
- Sold the Jan $40 calls against the one lot of shares owned for a credit $.57
- Rolled the Jan 6 (weekly) $38 puts to Jan $38 puts for a net credit of $.55
- There is about a 43% chance (according to option theory) that EEM will be trading below $38 at Jan expiration and CCI will be the proud new owner of a second lot of EEM. Since there is a good chance this may happen an investor really needs to be comfortable with this outcome. Additionally, CCI will have collected $1.84/share (4.8%) in option premium to lower the cost basis.
- If the stock stays between $38 and $40 over the next few weeks, CCI will still collect the $1.84 option premium and own one lot of shares.
- If it rises over $40, CCI will collect the $1.84 in option premium, and make $1.67 on the first lot of shares being called away.