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Former Short Position - SBUXInitial Cover-Stop was established off the hilltop resistance points which were below the 30wk moving average (Risk Corridor = 22.5%). The next hilltop occurred at 11/13/02 as confirmed upon the third subsequent decrease in closing price on 11/15/03. Since the 11/13 hilltop was above the 30wk moving average, the hilltop value was used to move the Cover-Stop to $24. However, while patiently awaiting the next valley-bottom and hilltop so we could make our next Cover-Stop adjustment, we received the Cover Configuration signal to exit. 3/16/03: We exit the position with the Cover-Stop violation and take a -12.5% hit to our ROI, with half our position still alive. 3/23/03: We get the double exit call -- a Cover-Stop violation AND a Cover Configuration Signal. With this portion of position we took a -19.4% hit to our ROI. Overall loss on SBUX this time = -16.1%. Let's consider the facts. This is our ugliest ROI for the year so far. We know things are going to go against our desires in the portfolio periodically. Frankly, we like double tall almond lattes just as much as the next guy. And even though Jane in Seattle and Kevin in Baltimore think it is un-American to Short Starbucks, we chose to do so. The important thing here is that we did so while limiting our downside risk.
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