Wednesday, April 3, 2013

Closed Short Call in Citigroup (C)

As discussed here, CCI has a long position in the financial sector etf (xlf) via the Jan 15 $10 Call, hedged via a shorter duration short call in Citigroup (C).

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As discussed in this post from March 23 CCI held the April 12 $44.5 call.  With today's pull back, especially in financials, CCI closed this position at $.14/contract.  C reports earnings on Apr 15, and CCI will wait until around that event before re-establishing the hedge portion of this trade

Since the position was established on Jan. 8 the approximate performance numbers are
  • 5.4% - simply holding xlf
  • 11.9% - holding the Jan $15 Leap (due to the increased risk/reward of the leverage)
  • 12.8% - the combined long/short position described here
Obviously, this long/short position is performing as desired.  Superior returns with lower risk ...the holy grail! However, there is plenty of time left on the position (Jan 15) anything can still happen.  Stay tuned.

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