Monday, October 20, 2008

Continuation Transactions -- Altria, General Electric, and iShares MSCI China ETF

Today, covered calls positions were established against four equities already owned in the Covered Calls Advisor Portfolio(CCAP). As shown by the transactions history below, the Oct08 options expired worthless and new options were sold today to roll-out to Nov08 covered call positions.

1. Altria(MO) Continuation Transaction

The following transaction was made today to establish a covered calls position against the 500 shares owned in Altria(MO):
10/20/08 Covered Calls Continuation Transaction -- STO 5 Nov08 $21.00 Calls @ $.67

The Transactions History to date is as follows:
08/19/08 Initial Stock Purchase Transaction -- Bought 500 MO @ $20.91
08/19/08 Initial Calls Sold Transaction -- Sold 5 MO Sep08 $21.00 Calls @ $.51
9/11/08 Ex-Dividend of $145.00 ($.29 * 500 shares)
09/20/08 Sep08 Options Expired
09/25/08 Covered Calls Continuation Transaction -- STO 5 Oct08 $21.00 Calls @ $.43
10/18/08 Oct08 Options Expired
10/20/08 Covered Calls Continuation Transaction -- STO 5 Nov08 $21.00 Calls @ $.67

The overall performance results(including commissions) for the MO transactions through the Nov08 expiration would be as follows:
Stock Purchase Cost: $10,463.95
($20.91*500+$8.95 commission)

Net Profit:
(a) Options Income: +$779.60 (500*($.51+$.43+$.67) - 2*$12.70 commissions)
(b) Dividend Income: +$145.00 ($.29 per share*500 shares ex-div on 9/11/08)
(c) Capital Appreciation (If exercised): +$27.10
= ($21.00-$20.91)*500 - 2*$8.95 commissions

Total Net Profit(If stock price exercised at $21.00): +$951.70
= (+$779.60 +$145.00 +$27.10)

Annualized Return If Exercised (ARIE) +37.7%
(+$951.70/$10,463.95)*(365/88 days)


2. General Electric(GE) Continuation Transaction

The following transaction was made today to establish a covered calls position against the 200 shares owned in General Electric(GE):
10/20/08 Covered Calls Continuation Transaction -- STO 2 Nov08 $21.00 Calls @ $.88

The Transactions History to date is as follows:
10/02/08 Initial Stock Purchase Transaction -- Bought 200 GE @ $22.25
10/02/08 Initial Calls Sold Transaction -- Sold 2 GE Oct08 $22.00 Calls @ $1.53
10/18/08 Oct08 Options Expired
10/20/08 Covered Calls Continuation Transaction -- STO 2 Nov08 $21.00 Calls @ $.88

The overall performance results(including commissions) for the GE transactions through the Nov08 expiration would be as follows:
Stock Purchase Cost: $4,458.95
($22.25*200+$8.95 commission)

Net Profit:
(a) Options Income: +$456.60 (200*($1.53+$.88) - 2*$12.70 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If exercised): -$267.90
= ($21.00-$22.25)*200 - 2*$8.95 commissions

Total Net Profit(If stock price exercised at $21.00): +$188.70
= (+$456.60 +$0.00 -$267.90)

Annualized Return If Exercised (ARIE) +35.1%
(+$188.70/$4,458.95)*(365/44 days)



3. iShares MSCI China ETF(FXI) Continuation Transaction

The following transaction was made today to establish a covered calls position against the 800 shares owned in iShares MSCI China ETF(FXI):
10/20/08 Covered Calls Continuation Transaction -- STO 8 Nov08 $34.00 Calls @ $1.30

The Transactions History to date is as follows:
08/18/08 Initial Calls Sold Transaction -- Bought 800 FXI @ $40.60
08/18/08 Initial Calls Sold Transaction -- Sold 8 FXI Sep08 $44.00 Calls @ $.60
09/20/08 Sep08 Options Expired
09/25/08 Covered Calls Continuation Transaction -- STO 8 Oct08 $40.00 Calls @ $1.10
10/18/08 Oct08 Options Expired
10/20/08 Covered Calls Continuation Transaction -- STO 8 Nov08 $34.00 Calls @ $1.30

The overall performance results(including commissions) for the FXI transactions through the Nov08 expiration would be as follows:
Stock Purchase Cost: $32,488.95
($40.60*800+$8.95 commission)

Net Profit:
(a) Options Income: +$2,370.10 (800*($.60 + $1.10 + $1.30) - 2*$14.95 commissions)
(b) Dividend Income: +$0
(c) Capital Appreciation (If exercised): -$5,297.90
= ($34.00-$40.60)*800 - 2*$8.95 commissions

Total Net Profit(If stock price exercised at $34.00): -$2,927.80
= (+$2,370.10 +$0.00 -$5,297.90)

Annualized Return If Exercised (ARIE) -37.0%
(-$2,927.80/$32,488.95)*(365/89 days)

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