Friday, September 25, 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:
09/25/09 Bought 300 EME @ $24.91
09/25/09 Sold 3 EME Oct09 $25.00 Calls @ $.95

You might recall that covered calls positions were held in EME for both Aug09 and Sep09 expirations and in both cases the positions ended in-the-money and the stock was called away. The strong fundamentals and value-oriented conditions that existed when these previous positions were established remain intact; so it was decided today to re-establish a covered calls position in EME with an Oct09 expiration.

EMCOR Group, Inc. is an Engineering and Construction (E&C) 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. Maintaining a corporate reputation for quality is essential for success in the highly-competitive bidding processes that is commonplace in the E&C industry. EMCOR is preeminent in this regard. In Fortune's Most Admired Companies rankings, EMCOR is #1 in the E&C category; and Forbes rates EMCOR as the "Best Managed" company in the Construction Industry.

Some potential results from this transaction are:
Absolute Return if Stock Price Unchanged at $24.91: +3.8%
Annualized Return If Unchanged (ARIU): +63.2%

Absolute Return if Exercised at $25.00: +4.2%
Annualized Return If Exercised (ARIE): +69.3%

Downside Breakeven Price Point: $23.96
Downside Breakeven Protection: 3.8%