Tuesday, October 23, 2007

Buy Accenture, iShares MSCI South Korea Index ETF, JP Morgan Chase, and Eli Lilly

Four new covered call positions were established today in the Covered Calls Advisor Portfolio(CCAP) as follows:

1. Accenture Ltd CL A Covered Calls Established

10/23/07 Bought 1000 ACN @ 39.48
10/23/07 Sold 10 ACN Nov07 40 Calls @ $1.05

Annualized Return If Unchanged: 38.8%
Annualized Return If Exercised: 58.1%
Downside Breakeven Protection: 2.7%


2. iShares MSCI South Korea Index ETF Covered Calls Established

10/23/07 Bought 800 EWY @ 68.40
10/23/07 Sold 8 EWY Nov07 70 Calls @ $1.90

Annualized Return If Unchanged: 39.0%
Annualized Return If Exercised: 71.8%
Downside Breakeven Protection: 2.8%


3. JP Morgan Chase Covered Calls Established

10/23/07 Bought 500 JPM @ 45.58
10/23/07 Sold 5 JPM Nov07 45 Calls @ $1.75

Annualized Return If Unchanged: 37.4%
Annualized Return If Exercised: 37.4%
Downside Breakeven Protection: 3.8%
Downside Maximum Return Protection 1.3% =[(45.58-45.00)/45.58]*100

4. Eli Lilly & Co. Covered Calls Established

10/23/07 Bought 500 LLY @ 56.48
10/23/07 Sold 5 LLY Nov07 55 Calls @ $2.95

Annualized Return If Unchanged: 49.0%
Annualized Return If Exercised: 49.0%
Downside Breakeven Protection: 5.2%
Downside Maximum Return Protection 2.6% =[(56.48-55.00)/56.48]*100

You'll notice that the first two positions are out-of-the-money (OTM) covered calls and the last two are in-the-money (ITM). An additional indicator termed 'downside maximum return protection' is included for any covered calls that are ITM when established. This represents the maximum percent that the stock price can fall by the expiration date and the maximum annualized ROI % will still be achieved.

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