Thursday, October 02, 2008

Unwinding XLF

Yesterday I sold the long put I had against XLF. I have noticed over the past couple of months that the put's time value was declining even though its intrinsic value was increasing. I decided not to push my luck much farther, as this put has showed an enormous gain since I bought it near the beginning of 2008. I'm glad to pocket the extra cash.

Given the probable success (ugh!) of the revised bailout plan, the share values of XLF's components will probably be propped artificially for months to come. Keeping zombie banks and brokerages alive indefinitely might make political sense to some people, but it makes zero investing sense to me. I'll have to look elsewhere for more special opportunities, because this one in financial services has run its course.