Tuesday, January 22, 2008

AT&T -- Closed

The covered call position in AT&T (T) expired out-of-the-money last Friday. The investment in AT&T was closed today by selling the stock. Despite the substantial decline, it was decided to close this holding and not to roll into a Feb08 covered call position since there is a quarterly earnings announcement scheduled for later this week on 1/24/08. Also, the CEO has had some somewhat negative comments recently about new business for AT&T which likely will not bode well for the company's future financial guidance provided as part of the earnings release. The transactions and results achieved for the T covered calls position closed today was as follows:

Transactions History:
12/26/07 Initial Stock Position -- Bought 300 T @ 41.49
12/26/07 Initial Call Options -- Sold 3 T Jan08 42.5 Calls @ $.65
01/08/08 Ex-Dividend Received -- 300 @ $.40
01/19/08 Call Options Expire
01/22/08 Closing Transaction -- Sold 300 T @ 35.65

Performance Results(including commissions):
Stock Purchase Cost: $12,456.95
($41.49*300+$9.95 commission)

Net Profit:
(a) Options Income: +$182.80 ($.65*300-12.20)
(b) Dividend Income: +$120.00 ($.40*300)
(c) Capital Appreciation: -$1,761.95 ($35.65-$41.49)*300-$9.95
Total Net Profit: -$1,459.15 (+$182.80+$120.00-$1,761.95)

AT&T ANNUALIZED RETURN ON INVESTMENT: -158.3%
(-$1,459.15/$12,456.95)*(365 days/27 days)

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