We have described in previous posts how to trade pairs. Today, we went short CHI and long CHY. Both are convertible bond closed-end funds run by Calamos. CHY is trading at a discount of about 7.3% and CHI is trading at a discount of about 1.4%. The difference is about 5.9% and the average difference (looking at monthly closes) over the last 2 years and a few months is about 3.3%. We entered our particular trade at a difference of 6.3%. We will aim to close the trade when the gap narrows.

See previous posts on pairs trading:

https://envisionco.net/?m=201212

and

https://envisionco.net/?m=201302

Warning: These are not guaranteed profitable trades. Please consult an investment advisory and understand the risks of these trades.