Friday, March 21, 2008

March 2008 Expiration Transactions

The Covered Calls Advisor Portfolio (CCAP) contained a total of 12 positions with March 2008 expirations, with the following results:

- 2 positions (MSFT and HLF) closed in-the-money
and the calls were exercised and the stock was called away. The annualized percent return-on-investment(ROI) results for these positions were:

Microsoft +61.7%
Herbalife +72.1%

- 10 positions ended out-of-the-money. Decisions will be made to either sell the stock, or to keep the stock and sell calls to establish Apr08 covered call positions. The related transactions will be made during the upcoming week and the actual transactions will be posted on this blog site on the same day they occur.

Details for the two exercised positions were as follows:

1. Microsoft -- Closed
A covered calls position in MSFT was established in the CCAP on 02/20/08 and the stock closed in-the-money yesterday:

Transactions History:
02/20/08 Initial Stock Position -- Bought 800 MSFT @ $28.15
02/20/08 Initial Call Options -- Sold 8 MSFT Mar08 29 Calls @ $.67
03/22/08 Options Exercised -- STC 800 MSFT @ $29.00
[Note: MSFT stock closed on expiration Thursday (3/20/08) at $29.18]

Performance Results(including commissions):
Stock Purchase Cost: $22,529.95
($28.15*800+$9.95 commission)

Net Profit:
(a) Options Income: +$520.05 ($.67*800-$15.95 commission)
(b) Dividend Income: $0
(c) Capital Appreciation: +$660.10 [($29.00*800-$9.95)-$22,529.95]
Total Net Profit: +$1,180.15 (+$520.05+$660.10)

MSFT ANNUALIZED RETURN ON INVESTMENT: +61.7%
(+$1,180.15/$22,529.95)*(365/31)


2. Herbalife -- Closed
A covered calls position in HLF was first established in the CCAP on 12/26/07. The stock was retained for writing January, February, and March covered calls. The stock closed in-the-money for Mar08 expiration and the position was closed.

The Transactions History is as follows:
12/26/07 Initial Stock Position -- Bought 500 HLF @ $39.32
12/26/07 Initial Call Options -- Sold 5 HLF Jan08 $40 Calls @ $1.40
01/19/08 Jan08 Options Expiration Date -- HLF closed below the strike price at $39.81
01/29/08 Covered Calls Continuation Transaction -- STO 5 Feb08 $40 Calls @ $1.60
02/16/08 Feb08 Options Expiration Date -- HLF closed below the strike price at $39.46
02/19/08 Covered Calls Continuation Transaction -- STO 5 Mar08 40 Calls @ $3.20
03/22/08 Options Exercised -- STC 500 HLF @ $40.00
[Note: HLF stock closed on expiration Thursday (3/20/08) at $48.00]

Performance Results(including commissions):
Stock Purchase Cost: $19,669.95
($39.32*500+$9.95 commission)

Net Profit:
(a) Options Income: +$3,058.90 (500*$1.40 + 500*$1.60 + 500*$3.20 -3*$13.70)
(b) Dividend Income: $0
(c) Capital Appreciation: +$320.10
= ($40.00-$39.32)*500 - 2*$9.95 commissions
Total Net Profit: +$3,379.00
= ($3,058.90 + $0 + $320.10)


HLF Annualized Return on Investment: +72.1%
(+$3,379.00/$19,669.95)*(365/87)

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