Wednesday, September 2, 2009

Establish EMCOR Group Inc. Covered Calls

A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of EMCOR Group Inc (EME) covered calls as follows:

Established EMCOR Group Inc(EME) Covered Calls for Sep09:
09/02/09 Bought 300 EME @ $22.36
09/02/09 Sold 3 EME Sep09 $22.50 Calls @ $.85

You might recall that a covered calls position with an AUG09 expiration was held in EMCOR Group, Inc. The position ended in-the-money and the stock was called away. The strong fundamentals and value-oriented conditions that existed when the previous position was established still remain; so it was decided today to re-establish a covered calls position in EME with a SEP09 expiration.

EMCOR Group, Inc. is an engineering and construction company that provides electrical and mechanical construction and facilities services worldwide. It engages in the design, integration, installation, start-up, operation, and maintenance of various electrical and mechanical systems; heating, ventilation, air conditioning, and refrigeration; fire protection systems; plumbing systems; and various industrial maintenance services.

Some potential results from this transaction are:
Absolute Return if Stock Price Unchanged at $22.36: +3.8%
Annualized Return If Unchanged (ARIU): +81.5%

Absolute Return if Exercised at $22.50: +4.4%
Annualized Return If Exercised (ARIE): +95.1%

Downside Breakeven Price Point: $21.51
Downside Breakeven Protection: 3.8%