Update: ACE Limited (ACE) vs The Chubb Corporation (CB)
- Posted by DynamicHedge
- on August 11th, 2011
From August 2 post:
The trade here is to be short $ACE (ACE Limited) and long $CB (The Chubb Corporation). Pull this spread up on your charting package and look at the long term moves. The spread could easily move to the $5.50 mark before reverting to the mean. The good news is that both stocks are through their earnings dates. If you believe in a bounce of the overall market, short less of $ACE or buy more $CB.
Well, we touched $5.50 and rolled over. I unwound the trade today. Sure it could go further in my favor, but it was a good shelter in the storm and I’m happy with the result. I’ll be back in the trade should it move $3 in either direction. No edge here.
Below is the original chart:
Below is the resolution (Note: chart below uses minute data and shows the intraday ranges better):
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DynamicHedge is an equities, futures and derivatives trader based on the West Coast. He runs a long/short opportunistic relative-value strategy within a proprietary trading group. More
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