Attention, those of you who own Financial Select Sector SPDR Fund (XLF): XLF has tightened the criteria for its ETF. As a result, it has announced a spin-off of shares for a real estate centered position under the ticker symbol XLRE. Each owner of XLF will receive an amount of XLRE shares proportionate to the amount that you currently own in XLF.
On Trade Day, you will want to sell your shares of XLRE at the market price. Following this, you will need to make some adjustments to your XLF position to account for the proceeds of the sale. The steps are as follows:
1) Take the net amount of the sale of XLRE, and divide it by the total number of shares that you currently own in XLF; this will give you the cost basis adjustment that you will need for XLF. For example, if you receive $4,000 in net proceeds, and you own 1,000 shares, you would take $4,000/1,000 for a cost basis adjustment of $4.
2) Take the cost basis adjustment figure, and subtract it from the price paid for each of your outstanding bundles of shares on the position. For example, if you had a bundle of shares that was purchased for $25 and a cost basis adjustment of $4, you would subtract $4 from $25 to arrive at a new price paid of $21.
3) After you have completed adjusting each bundle of shares, you will update your band rule worksheets to reflect the adjusted prices. Following this, you may resume regular trading of the position.
Lattco PRO / Lattco AutoPilot Clients: After you have completed selling off your XLRE shares, please contact us and we will perform the necessary adjustments to your account.
If you have any questions, please don’t hesitate to contact us at firstname.lastname@example.org or 1-888-6-SNIDER. We’ll be happy to walk you through the process.