{"id":56,"date":"2013-02-25T11:57:34","date_gmt":"2013-02-25T16:57:34","guid":{"rendered":"https:\/\/envisionco.net\/?p=56"},"modified":"2013-02-25T11:57:34","modified_gmt":"2013-02-25T16:57:34","slug":"closing-out-pairs-trade","status":"publish","type":"post","link":"https:\/\/envisionco.net\/?p=56","title":{"rendered":"Closing out Pairs Trade"},"content":{"rendered":"<p>The pairs trade we described on December 14th could be closed out this morning. In that trade, we described how you could go long SBW and short ESD for a net outflow of about $7.92. SBW and ESD are two closed-end funds that invest in emerging market debt, they both have similar risk\/return profiles. By doing this pairs trade, you would have been long and short about $10,000 of each CEF.<\/p>\n<p>On December 14th, ESD was trading at a 2.65% discount to NAV and SBW was trading at a 6.80% discount to NAV. The difference was 4.14%, we set a target of closing the trade when the discount narrowed to 1.65%.<\/p>\n<p>As I am writing this, SBW is trading at a discount of 2.92%. ESD is trading at a discount of 1.74%. The spread has narrowed from 4.14% to 1.18%. You could close out this transaction for a profit of $200 plus.<\/p>\n<p><a href=\"https:\/\/envisionco.net\/?attachment_id=57\" rel=\"attachment wp-att-57\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-57\" alt=\"pairs\" src=\"https:\/\/envisionco.net\/wp-content\/uploads\/2013\/02\/pairs-300x161.png\" width=\"300\" height=\"161\" srcset=\"https:\/\/envisionco.net\/wp-content\/uploads\/2013\/02\/pairs-300x161.png 300w, https:\/\/envisionco.net\/wp-content\/uploads\/2013\/02\/pairs-500x269.png 500w, https:\/\/envisionco.net\/wp-content\/uploads\/2013\/02\/pairs.png 707w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p>&nbsp;<\/p>\n<p>Please note there could be considerable risk in a trade like this, so always consult a financial adviser and do lots of research.<\/p>\n<p>Assumptions:<br \/>\n1. Short borrow fee of 3.5%<br \/>\n2. No margin fee<br \/>\n3. Commissions of $10 per transaction<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The pairs trade we described on December 14th could be closed out this morning. In that trade, we described how you could go long SBW and short ESD for a net outflow of about $7.92. SBW and ESD are two &hellip; <a href=\"https:\/\/envisionco.net\/?p=56\">Continue reading <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-56","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/envisionco.net\/index.php?rest_route=\/wp\/v2\/posts\/56","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/envisionco.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/envisionco.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/envisionco.net\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/envisionco.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=56"}],"version-history":[{"count":2,"href":"https:\/\/envisionco.net\/index.php?rest_route=\/wp\/v2\/posts\/56\/revisions"}],"predecessor-version":[{"id":59,"href":"https:\/\/envisionco.net\/index.php?rest_route=\/wp\/v2\/posts\/56\/revisions\/59"}],"wp:attachment":[{"href":"https:\/\/envisionco.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=56"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/envisionco.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=56"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/envisionco.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=56"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}