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Wednesday, February 25, 2009

U.S. Oil Fund ETF -- Continuation Transaction

The following transaction was made to establish a covered calls position against the 200 shares owned in U.S. Oil Fund ETF (USO):
02/25/09 Sell-to-Open (STO) 2 USO Mar09 $28s @ $.95

The transactions history to date is as follows:
12/19/08 Initial Stock Purchase Transaction -- Bought 200 USO @ $32.33
12/19/08 Initial Calls Sold Transaction -- Sold 2 USO Jan09 $34.00 Calls @ $2.40
01/17/09 Jan09 Options Expired
01/20/09 Covered Calls Continuation Transaction -- STO 2 Feb09 $32.00 Calls @ $1.90
02/21/09 Feb09 Options Expired
02/25/09 Sell-to-Open (STO) 2 USO Mar09 $28s @ $.95
Note: the price of USO was $25.97 today when the call options were sold.

The overall performance results(including commissions) for the USO transactions are as follows:
Stock Purchase Cost: $6,474.95
($32.33*200+$8.95 commission)

Net Profit:
(a) Options Income: +$1,018.65 (200*($2.40+$1.90+$.95) - 3*$10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged): -$1,280.95
= ($25.97-$32.33)*200 - $8.95 commissions
(d) Capital Appreciation (If exercised): -$874.95
= ($28.00-$32.33)*200 - $8.95 commissions

Total Net Profit(If stock price unchanged at $25.97): -$262.30
= (+$1,018.65 +$0.00 -$1,280.95)
Total Net Profit(If stock price exercised at $28.00): +$143.70
= (+$1,018.65 +$0.00 -$874.95)

Absolute Return if Unchanged: -4.1%
=-$262.30/$6,474.95
Annualized Return If Unchanged (ARIU): -16.1%
=(-$262.30/$6,474.95)*(365/92 days)

Absolute Return if Exercised: +2.2%
=+$143.70/$6,474.95
Annualized Return If Exercised (ARIE) +13.3%
=(+$143.70/$6,474.95)*(365/61 days)

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