With only a few days until expiration, CCI rolled the short call in Citigroup as a hedge against the long. leveraged position in XLF held in the portfolio. Specifically, CCI
- bought back the Dec 21 $52.50 call at $.08, harvesting $.36 in option premium per contract
- sold the Jan 10, $53 call at $.44/contract.
Since inception on Jan 8, 2013 the performance of various potential holdings as of the time of this trade are shown below:
- The XLF etf has been relatively flat lately but continues to hold onto its excellent performance since January - up 24.7%! That is comprised of 23.4% unrealized cap gain, and 1.3% in dividends.
- The leverage obtained by instead simply holding the Jan 15 $10 call has generated and unrealized, leveraged, capital gain of 58.0%. (leverage is great when it works!!!)
- The leveraged, long/short strategy defined in this thread is up 53.8%. That is comprised of 39.5% in unrealized leveraged capital gains, 14.3% in realized option premium.