Monday, June 21, 2010

Establish Covered Calls in Bank of America, iShares MSCI China ETF, iShares MSCI South Korea ETF, and Petrobras

With a portion of the cash received from the four positions that were in-the-money last Friday upon Jun2010 expiration, four new covered calls positions were established today as follows:

1. Bank of America Corp.(BAC) -- Covered Calls Established
A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of Bank of America Corp (BAC) covered calls as follows:

Established Bank of America Corp (BAC) Covered Calls for Jul09:
06/21/2010 Bought 400 BAC @ $16.04
06/21/2010 Sold 4 BAC Jul2010 $16.00 Calls @ $.58

A possible overall performance result(including commissions) for the BAC transactions would be as follows:
Stock Purchase Cost: $6,424.95
= ($16.04*400+$8.95 commission)

Net Profit:
(a) Options Income: +$220.05
= (400*$.58 - $11.95 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock assigned at $16.00): -$24.95
= ($16.00-$16.04)*400 - $8.95 commissions

Total Net Profit(If stock assigned at $16.00): +$195.10
= (+$220.05 +$0.00 -$24.95)

Absolute Return if Assigned at $16.00: +3.0%
= +$195.10/$6,424.95
Annualized Return If Exercised (ARIE) +42.6%
= (+$195.10/$6,424.95)*(365/26 days)

2. iShares MSCI China ETF -- Covered Calls Established
A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of iShares MSCI China ETF (FXI) covered calls as follows:
Established iShares MSCI China ETF (FXI) Covered Calls for Jul2010:
06/21/2010 Bought 1,100 FXI @ $41.85
06/21/2010 Sold 11 FXI Jul2010 $43.00 Calls @ $.71

Two possible overall performance results(including commissions) for the FXI transactions would be as follows:
Stock Purchase Cost: $46,043.95
= ($41.85*1,100+$8.95 commission)

Net Profit:
(a) Options Income: +$763.80
= (1,100*$.71 - $17.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If FXI unchanged at $41.85): $-8.95
= ($41.85-$41.85)*1,100 - $8.95 commissions
(c) Capital Appreciation (If FXI assigned at $43.00): +$1,256.05
= ($43.00-$41.85)*1,100 - $8.95 commissions

Total Net Profit(If FXI price unchanged at $41.85): +$754.85
= (+$763.80 +$0.00 -$8.95)
Total Net Profit(If FXI assigned at $43.00): +$2,019.85
= (+$763.80 +$0.00 +$1,256.05)

Absolute Return (If FXI unchanged at $41.85): +1.6%
= +$754.85/$46,043.95
Annualized Return If Unchanged (ARIU): +23.0%
= (+$754.85/$46,043.95)*(365/26 days)

Absolute Return if Exercised at $43.00: +4.4%
= +$2,019.85/$46,043.95
Annualized Return If Exercised (ARIE): +61.6%
= (+$2,019.85/$46,043.95)*(365/26 days)

3. iShares MSCI South Korea ETF -- Covered Calls Established
A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of iShares MSCI South Korea ETF (EWY) covered calls as follows:
Established iShares MSCI South Korea ETF (EWY) Covered Calls for Jul2010:
06/21/2010 Bought 400 EWY @ $49.33
06/21/2010 Sold 4 EWY Jul2010 $50.00 Calls @ $.85

Two possible overall performance results(including commissions) for the EWY transactions would be as follows:
Stock Purchase Cost: $19,740.95
= ($49.33*400+$8.95 commission)

Net Profit:
(a) Options Income: +$328.05
= (400*$.85 - $11.95 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If EWY unchanged at $49.33): $-8.95
= ($49.33-$49.33)*400 - $8.95 commissions
(c) Capital Appreciation (If EWY assigned at $50.00): +$259.05
= ($50.00-$49.33)*400 - $8.95 commissions

Total Net Profit(If EWY price unchanged at $49.33): +$319.10
= (+$328.05 +$0.00 -$8.95)
Total Net Profit(If EWY assigned at $50.00): +$587.10
= (+$328.05 +$0.00 +$259.05)

Absolute Return (If EWY unchanged at $49.33): +1.6%
= +$319.10/$19,740.95
Annualized Return If Unchanged (ARIU): +22.7%
= (+$319.10/$19,740.95)*(365/26 days)

Absolute Return if Exercised at $50.00: +3.0%
= +$587.10/$19,740.95
Annualized Return If Exercised (ARIE): +41.8%
= (+$587.10/$19,740.95)*(365/26 days)

4. Petrobras -- Covered Calls Established
A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of Petrobras (PBR) covered calls as follows:
Established Petrobras (PBR) Covered Calls for Jul09:
06/21/2010 Bought 300 PBR @ $39.34
06/21/2010 Sold 3 PBR Jul2010 $40.00 Calls @ $1.05

Two possible overall performance results(including commissions) for the PBR transactions would be as follows:
Stock Purchase Cost: $11,810.95
= ($39.34*300+$8.95 commission)

Net Profit:
(a) Options Income: +$303.80
= (300*$1.05 - $11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If PBR unchanged at $39.34): $-8.95
= ($39.34-$39.34)*300 - $8.95 commissions
(c) Capital Appreciation (If PBR assigned at $40.00): +$189.05
= ($40.00-$39.34)*300 - $8.95 commissions

Total Net Profit(If PBR price unchanged at $39.34): +$294.85
= (+$303.80 +$0.00 -$8.95)
Total Net Profit(If PBR assigned at $40.00): +$492.85
= (+$303.80 +$0.00 +$189.05)

Absolute Return (If PBR unchanged at $39.34): +2.5%
= +$294.85/$11,810.95
Annualized Return If Unchanged (ARIU): +35.0%
= (+$294.85/$11,810.95)*(365/26 days)

Absolute Return if Exercised at $40.00: +4.2%
= +$492.85/$11,810.95
Annualized Return If Exercised (ARIE): +58.6%
= (+$492.85/$11,810.95)*(365/26 days)

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