Sunday, February 19, 2012

Thinking Retail has Hit a Short-Term Peak.

Retail stocks have had a great run the past two months.   CCI is willing to take a small position that that trend will slow down soon.   On Friday, CCI sold the March $59 -$60 call spread in XRT (an etf of retailers) for a credit of $43/contract after commission.

Basically this position will profit  if this sector pulls back in the next month. In this case it will act as a hedge by providing some income to balance the likely overall losses to the full portfolio.   If the retails  sector continues to soar, the max loss on this trade is $57/contract.

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