Wednesday, December 19, 2012

CISCO Position Closed....Certainly a Winner

Frequent readers will recall that CCI has had a long standing trade on in Cisco (CSCO).  Specifically owning the Jan 14 $10 LEAP and writing calls against the position.  As discussed in this post from late November the last activity was to sell  the Dec $19 calls against this position.

With Cisco trading over $20 this week, CCI closed this position.  The trade benefited from the lucky timing ....(oops I meant my brilliant analysis) of establish the position when Cisco was trading around $16 and watching the stock run up 25% to $20. The leverage from buying the LEAP vs. the stock turned that appreciated gain on the LEAP to a sweet $55%.  The covered calls sold against this position muted those gains by nearly 10%.  However, writing those calls provided some downside protection to the position in the event that the stock had not moved in the right direction.

The closing of this trade marks the 4th time CCI has cycled through this type of position in Cisco. In total CCI has made a very, very nice 83% gain over about the last 20 months. 

Certainly a winner!

CCI currently has no position in Cisco.  If Cisco were to pull back we would consider re-establishing this  this type of trade in the future.

No comments:

Post a Comment