Just after rolling the C covered call last week, financial stocks (Both XLF and C) fell. As discussed in the last post, CCI had aggressively rolled the covered call in C "hoping for" a short term reversal to the mean. That essentially happened just a few days later. Better lucky than good! So it was time to recapture some option premium lost in the last roll and re-establish a somewhat less aggressive position as described below:
- bought back the Jan 24 $54 call in C at $0.97 (sold at $1.63 last week)
- sold the Feb 22, $55 call in C at $1.08 (for an $.11 credit)
This position was initiated on Jan 8, 2013, almost exactly a year ago. The performance of various potential holdings as of the time of this trade are shown below:
- The XLF etf has been up with the rest of the market. Just buying and holding the XLF over this period would have returned a very nice 29.1 %. That is comprised of 27.2% unrealized cap gain, and 1.9% in dividends. This is down 1.3% since the last post.
- The leverage obtained by instead simply holding the Jan 15 $10 call would have generated an eye popping unrealized, leveraged, capital gain of 67.2%. This is down 2.8% since the last post
- The leveraged, long/short strategy defined in this thread is up 56.3%. An outstanding gain with somewhat less risk/leverage than holding a naked LEAP. Only down .5% since the last post