Meanwhile, in the STP we have 50 FXI Aug $42/44 bull call spreads that we paid net 0.78 for and the $42 calls are down to 0.66 from $1.15 Friday. FXI never made it back to $44 so let's roll the $42s to the Sept $40.50s at $1.70 for about $1 and we'll leave the spread like that for now but, if FXI fails to hold $40, we'll sell Sept $41s (now $1.50) and roll down to the $38s (now $3.50) on the expectations that China will try at least once more to pump things back up.
Meanwhile, please keep in mind that FXI was an upside hedge we EXPECTED TO LOSE to cover our bearish China plays which are:
- 20 FXP Dec $25/34 bull call spreads (STP) at $3.42 ($6,840) with 10 short $23 puts at $1.89 ($1,890) for net $4,950 and a $14,000 payoff at $34 (+$10,050).
By spending $5,000 to roll to the Sept FXIs, we are locking in our $10,000 gain (though potentially sacrificing half of it).
- 10 CHAU Nov $65/53 bear put spreads at $9.21 ($9,210) with 3 short Aug $35 puts at $5.15 ($1,545) for net $7,665 (LTP) and a $12,000 payoff potential below $53 (+$4,335).
So, with $14,385 in profits coming to us on the two short trades, we hedge with about 1/3 of that money now that both shorts are in the money for us. Like the short Aug CHAUs, now that we're this low (and we'll roll them, of course) we're happy to flip to a long-term long position going forward - AFTER we cash in our winning shorts.
Meanwhile the STP popped 17% today ($17,000) so we're still well-protected on a market downturn but it is time to adjust our LTP positions and bring some cash off the sidelines. I'll go over our positions later.
