Tuesday, July 22, 2008

Positions Closed -- AU Optronics, Cooper Tire, Frontier Oil, and Regions Financial

Today, positions were closed by selling the stock of AU Optronics(AUO), Cooper Tire(CTB), Frontier Oil(FTO) and Regions Financial(RF). As shown in the details below, there were substantial losses in each of these investments. The reason for selling out of these holdings is that there has been what I like to refer to as a 'fundamental breakdown' in these four companies resulting directly from a deterioration in the earnings results compared with the expected earnings when these stocks were purchased. A single earnings report below expectations is sufficient grounds to sell the stock from the Covered Calls Advisor's portfolio.

1. AU Optronics(AUO) -- Closed

Transactions History:
05/01/08 Initial Stock Purchase Transaction -- Bought 1000 AUO @ $19.778
05/01/08 Initial Calls Sold Transaction -- Sold 10 AUO May08 20 Calls @ $.60
05/17/08 May08 Options Expired. Note: AUO closed at $19.31 on May expiration Friday.
05/22/08 Covered Calls Continuation Transaction -- Sold 10 Jun08 20 Calls @ $.40
06/21/08 Jun08 Options Expired. Note: AUO closed at $16.70 on June expiration Friday.
06/23/08 Covered Calls Continuation Transaction -- Sold 10 Jul08 17.5 Calls @ $.40
07/19/08 Jul08 Options Expired. Note: AUO closed at $13.09 on July expiration Friday.
07/22/08 Sold 1000 AUO @ $13.12

The overall performance results(including commissions)for the AUO transactions were as follows:

Stock Purchase Cost: $19,786.95
($19.778*1000+$8.95 commission)

Net Profit:
(a) Options Income: $1,350.65 (1000*($.60+$.40+$.40 - 3*$16.45 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation: -$6,640.10
= ($13.12-$19.778)*1000 - 2*$8.95 commissions

Total Net Profit: -$5,289.45
= (+$1,350.65+$0-$6,640.10)

Absolute Return: -26.7%
(-$5,289.45/$19,786.95)


2. Cooper Tire(CTB) -- Closed

Transactions History:
04/28/08 Bought 1000 CTB @ $14.71
04/28/08 Sold 10 CTB May08 $15 Calls @ $.70
05/17/08 May08 Options Expired. Note: CTB closed at $12.59 on May expiration Friday.
05/21/08 Covered Calls Continuation Transaction -- Sold 10 Jun08 12.50 Calls @ $.85
06/21/08 Jun08 Options Expired. Note: CTB closed at $8.49 on June expiration Friday.
06/23/08 Covered Calls Continuation Transaction -- Sold 10 Jul08 10 Calls @ $.35
07/19/08 Jul08 Options Expired. Note: CTB closed at $8.96 on July expiration Friday.
07/22/08 Sold 1000 AUO @ $9.56

The overall performance results(including commissions)for the CTB transactions were as follows:

Stock Purchase Cost: $14,718.95
($14.71*1000+$8.95 commission)

Net Profit:
(a) Options Income: +$1,850.65 (1000*($.70+$.85+$.35 - 3*$16.45 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation: -$5,167.90
= ($9.56-$14.71)*1000 - 2*$8.95 commissions

Total Net Profit: -$3,317.25
= (+$1,850.65+$0-$5,167.90)

Absolute Return: -22.5%
(-$3,317.25/$14,718.95)


3. Frontier Oil(FTO) -- Closed

Transactions History:
02/20/08 Initial Stock Purchase Transaction -- Bought 500 FTO @ $37.60
02/20/08 Initial Calls Sold Transaction -- Sold 5 FTO Mar08 40 Calls @ $1.35
03/22/08 Mar08 Options Expired. Note: FTO closed at $27.94 on Mar expiration Friday.
03/24/08 Covered Calls Continuation Transaction -- Sold 5 Apr08 30 Calls @ $1.45
04/19/08 Apr08 Options Expired. Note: FTO closed at $26.67 on Apr expiration Friday.
06/02/08 Covered Calls Continuation Transaction -- Sold 5 Jun08 35 Calls @ $.60
06/21/08 Jun08 Options Expired. Note: FTO closed at $24.93 on June expiration Friday.
06/23/08 Covered Calls Continuation Transaction -- Sold 10 Jul08 25 Calls @ $1.65
07/19/08 Jul08 Options Expired. Note: FTO closed at $18.27 on July expiration Friday.
07/22/08 Sold 1000 AUO @ $19.58

The overall performance results(including commissions)for the CTB transactions were as follows:

Stock Purchase Cost: $18,808.95
($37.60*500+$8.95 commission)

Net Profit:
(a) Options Income: +$2,474.20 (500*($1.35+$1.45+$.60+$1.65 - 4*$12.70 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation: -$9,027.90
= ($19.58-$37.60)*500 - 2*$8.95 commissions

Total Net Profit: -$6,553.70
= (+$2,474.20+$0-$9,027.90)

Absolute Return: -34.8%
(-$6,553.70/$18,808.95)


4. Regions Financial(RF) -- Closed

Transaction History:
06/03/08 Initial Stock Purchase Transaction -- Bought 1000 RF @ $16.77
06/03/08 Initial Calls Sold Transaction -- Sold 10 RF Jul08 17.50 Calls @ $.75
06/13/08 Ex-Dividend ($.38 per share)
06/21/08 Jun08 Options Expired. Note: RF closed at $11.22 on June expiration Friday.
06/23/08 Covered Calls Continuation Transaction -- Sold 10 Jul08 12.50 Calls @ $.35
07/19/08 Jul08 Options Expired. Note: RF closed at $10.11 on July expiration Friday.
07/22/08 Sold 1000 RF @ $10.65

The overall performance results(including commissions)for the AUO transactions were as follows:

Stock Purchase Cost: $16,778.95
($16.77*1000+$8.95 commission)

Net Profit:
(a) Options Income: $1,067.10 (1000*($.75+$.35 - 2*$16.45 commissions)
(b) Dividend Income: $380.00 ($.38*1000 shares)
(c) Capital Appreciation: -$6,640.10
= ($10.65-$16.77)*1000 - 2*$8.95 commissions

Total Net Profit: -$5,193.00
= (+$1,067.10+$380.00-$6,640.10)

Absolute Return: -30.9%
(-$5,193.00/$16,778.95)

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