With D.C. dominating the news, CCI decided to re-establish a short call in Citigroup as a hedge against the long position in XLF held in the portfolio. Specifically, on Monday CCI sold the Nov 1 $52 call at $.32.
Since inception on Jan 8, the performance of various potential holdings as of the close of trading today are shown below
- The XLF etf is still up 19.4%! (including dividends)
- The leverage obtained by instead simply holding the Jan 15 $10 call would have returned 45.2%.
- The leveraged, long/short strategy defined in this thread is up 43.6%. (i.e the short call has not been very much of a drag on the leveraged gain while providing a modest hedge for down moves)