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Thursday, September 20, 2007

Covered Calls Advisor Portfolio -- Initial Positions Completed

The establishing of initial positions in the Covered Calls Advisor Portfolio (CCAP) is now completed. The total initial capital investment in the account is $250,000. All trades were made in a CBOE Virtual Trader account powered by Options Xpress.

The worksheet below shows the 11 covered call positions now in the portfolio. The total cost of purchasing these positions (including commissions) was $240,051.40, so there is an additional $9,948.60 in cash in the account for a starting total investment of $250,000.

From this initial stake of $250,000, this CCAP will be managed on an ongoing basis with the primary objective being to achieve market-beating returns. All transactions will be documented on this blog site the same day they are made and financial tracking results will be posted at the close of each calendar month beginning next month (October '07). Note: There will be no cash deposits or withdrawals made with CCAP (except for any dividends earned on stocks held in the account), so monitoring portfolio results compared with the original $250,000 investment will be very straightforward.

Readers: Your thoughts and ideas are always welcome here -- simply click on the 'Comments' link below; or if you prefer greater confidentiality email the Covered Calls Advisor at

Regards and Godspeed


  1. Good spread.
    You need to define ARIU and ARIE. They look like annual return if uncalled and annual return if expired, which, I think, is the same thing.

  2. ARIE stands for Annualized Return If Exercised and ARIU stands for Annualized Return If Unchanged (or more precisely, Annualized Return If Stock Price Unchanged). If a stock purchase price is in-the-money when purchased, then the two percents will be the same. However, if the stock price is lower than the strike price when purchased (i.e. out-of-the-money), then the ARIE will be higher than the ARIU.
    In this out-of-the-money (OTM)case, the ARIU is the return received solely from the option premium. Here, there is no profit (or loss) from the stock price since it is unchanged in price.
    In this OTM case, the ARIE shows a higher annualized return than ARIU since the investors total profit expiration is higher. Then, in addition to the option premium received, the investor also receives profit from the gain in the price of the stock.
    I'm not sure I explained that very well, but hopefully it makes better sense now. Post another comment if you need further explanation and I'll give it another try.