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Sunday, November 30, 2008

Returns -- Through November 2008

Both 2008 year-to-date and 2007 performance results for the Covered Calls Advisor Portfolio (CCAP) are presented below. The single measure used to determine overall portfolio investment performance results is called 'Total Account Value Return Percent' -- a simple example demonstrates how it is calculated:
If the total CCAP portfolio value was $100,000 at the beginning of the calendar year and $110,000 at the end of that year (and with no deposits or withdrawals having been made), then the 'Total Account Value Return Percent' would be +10.0% [($110,000-$100,000)/$100,000]*100.

In addition, CCAP results each year are shown below and are always compared against an overall stock market benchmark for the comparable time period, namely the Russell 3000 Index ETF (ticker symbol IWV).

1. 2008 Year-to-Date Results (Jan 1st through Nov 30th, 2008):

CCAP 2008 Year-to-Date Absolute Return = -25.6 %
($199,733.10-$257,886.51)/$257,886.51

Benchmark Russell 3000(IWV) 2008 Yr-to-Date Absolute Return = -39.2%
($51.35-$84.40)/$84.40

A 25.6% decline so far this year is certainly disappointing. But when viewed in comparison with the 39.2% decline in the overall stock market benchmark, the CCAP is currently outperforming by 13.6 percentage points (39.2%-25.6%).

2. 2007 Results:

The Covered Calls Advisor Portfolio (CCAP) was initiated on September 14th, 2007 with a beginning balance of $250,000. The CCAP balance at year-end (12/31/07) was $257,886.51. Below are the returns of the CCAP for this 2007 timeframe compared with the results of the Russell 3000 (IWV) benchmark during the same time period.

CCAP 2007 Absolute Return = +3.2%
($257,886.51-$250,000.00)/$250,000.00
Benchmark (IWV) 2007 Absolute Return = -1.2%
($84.40-$85.43)/$85.43

The corresponding annualized return for the 108 days the CCAP existed in 2007 (between Sept 14, 2007 and Dec 31, 2007) was:

CCAP 2007 Annualized Return = +10.7%
[($257,886.51-$250,000.00)/$250,000.00]*(365/108 days)

Benchmark Russell 3000(IWV) 2007 Annualized Return = -4.1%
[($84.40-$85.43)/$85.43]*(365/108 days)

As shown in the sidebar near the top of this site, the Covered Calls Advisor's Overall Market Meter shows that a SLIGHTLY BULLISH investment posture is appropriate at this time. The corresponding covered calls investing approach is to write near-month primarily slightly out-of-the-money covered calls. By 'slightly out-of-the-money', this advisor means that for a covered calls portfolio, on average covered calls positions should be established somewhere between 1.0% and 2.5% below the strike price.

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