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FXI $96.00 - FTSE/Xinhua China 25 Index Fund

That was not how I wanted to enter this play. The breakout target was triggered on Wednesday with a gap open from 93.75 to $95.80. The problem with trading an overseas index is that the U.S. price is determined overnight by the action overseas. There is very little intraday movement. The gap open on the LEAP inflated the price by nearly +$2. Hopefully you waited a few minutes for the excitement to cool before making the entry. The low for the day was -1.40 lower. Since nobody expects China to cool in the near future this spike in the option price could be recovered quickly.

The iShares FTSE/Xinhua China 25 Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the FTSE/Xinhua China 25 Index.

Component list: http://tinyurl.com/y9fv6a

This iShare focuses on the largest companies in China (58% of it positions) and Hong Kong (42%). These are the most liquid companies in these markets. With Asia growing by leaps and bounds the FXI generated a +40% return in 2005 without using options. We hope to do better using LEAPs.

Breakout target: $94.50 hit 11/22/06 on gap open to $95.80

Position: 2009 $100 LEAP Call VHF-AT @ $13.50


 

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