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Thursday, July 22, 2010

Continuation Transactions to Establish August 2010 Covered Calls Positions

Last Friday was options expiration for Jul2010 and all twelve of the Jul2010 covered calls positions in the Covered Calls Advisor Portfolio were out-of-the-money. Today it was decided to sell out of the position in Gap Inc (see prior post on this blog) and to retain the existing shares in the remaining eleven positions and to establish Aug2010 covered calls positions in them. The transactions history as well as some possible results for each position are detailed below:


1. Apple Inc.(AAPL) -- Continuation Transaction

The transactions history to date for Apple Inc.(AAPL) is as follows:
02/24/2010 Bought 100 AAPL @ $198.677
02/24/2010 Sold 1 AAPL Mar2010 $210.00 Call @ $1.57
Roll-Up-and-Out Transaction:
03/19/2010 Buy-to-Close (BTC) 1 AAPL Mar2010 $210.00 @ $12.20
03/19/2010 Sell-to-Open (STO) 1 AAPL Apr2010 $230.00s @ $3.40
Note: The price of AAPL was $222.18 today when this debit-spread was transacted.
04/16/2010 Buy-to-Close (BTC) 1 AAPL Apr2010 $230.00 @ $19.00
04/16/2010 Sell-to-Open (STO) 1 AAPL May2010 $250.00 @ $9.40
Note: The price of AAPL was $248.90 today when this debit-spread was transacted.
5/22/2010 May2010 Options Expired
Note: The closing price of AAPL was $242.32 on expiration Friday
6/01/2010 Sold 1 AAPL Jun2010 $260.00 @ $9.50
Note: The price of AAPL was approximately $261.35 when this option was sold.
6/18/2010 Buy-to-Close (BTC) 1 AAPL Jun2010 $260.00 @ $13.90
6/18/2010 Sell-to-Open (STO) 1 AAPL Jul2010 $280.00 @ $7.50
Note: The price of AAPL was $273.88 today when this debit-spread was transacted.
07/17/2010 Jul2010 Options Expired
Note: The closing price of AAPL was $249.90 on expiration Friday.
07/22/2010 Sold 1 AAPL Aug2010 $270.00 Call @ $4.35
Note: The price of AAPL was $258.02 today when this option was sold.

Two possible overall performance results(including commissions) for the Apple Inc. (AAPL) transactions would be as follows:
Stock Purchase Cost: $19,876.65
= ($198.677*100+$8.95 commission)

Net Profit:
(a) Options Income: -$996.20
= (100*($1.57-$12.20+$3.40-$19.00+$9.40+$9.50-$13.90+$7.50+$4.35) - 6*$9.70 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $258.02): +$5,925.35
= ($258.02-$198.677)*100 - $8.95 commissions
(c) Capital Appreciation (If stock called away at $270.00): +$7,123.35
= ($270.00-$198.677)*100 - $8.95 commissions

Total Net Profit(If stock price unchanged at $258.02): +$4,929.15
= (-$996.20 +$0.00 +$5,925.35)
Total Net Profit(If stock price exercised at $270.00): +$6,127.15
= (-$996.20 +$0.00 +$7,123.35)

Absolute Return (If Stock unchanged at $258.02): +24.8%
= +$4,929.15/$19,876.65
Annualized Return If Exercised (ARIE) +50.9%
= (+$4,929.15/$19,876.65)*(365/178 days)

Absolute Return (If Stock exercised at $270.00): +30.8%
= +$6,127.15/$19,876.65
Annualized Return If Exercised (ARIE) +63.2%
= (+$6,127.15/$19,876.65)*(365/178 days)

2. Bank of America Corp.(BAC) -- Continuation Transaction

The transactions history to date for Bank of America Corp.(BAC) is as follows:
06/21/2010 Bought 400 BAC @ $16.04
06/21/2010 Sold 4 BAC Jul2010 $16.00 Calls @ $.58
07/17/2010 Jul2010 Options Expired
Note: The closing price of BAC was $13.98 on expiration Friday.
07/22/2010 Sold 4 BAC Aug2010 $14.00 Calls @ $.50
Note: The price of BAC was $13.87 today when this option was sold.

Two possible overall performance results(including commissions) for the Bank of America Corp.(BAC) transactions would be as follows:
Stock Purchase Cost: $6,424.95
= ($16.04*400+$8.95 commission)

Net Profit:
(a) Options Income: +$408.10
= (400*($.58+$.50) - 2*$11.95 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $13.87): -$876.95
= ($16.04-$13.87)*400 - $8.95 commissions
(c) Capital Appreciation (If stock assigned at $14.00): -$824.95
= ($14.00-$16.04)*400 - $8.95 commissions

Total Net Profit(If stock price unchanged at $13.87): -$468.85
= (+$408.10 +$0.00 -$876.95)
Total Net Profit(If stock assigned at $14.00): -$416.85
= (+$408.10 +$0.00 -$824.95)

Absolute Return (If Stock unchanged at $13.87): -2.4%
= -$468.85/$19,876.65
Annualized Return If Unchanged (ARIU) -14.1%
= (-$468.85/$19,876.65)*(365/61 days)

Absolute Return if Assigned at $14.00: -2.1%
= -$416.85/$19,876.65
Annualized Return If Exercised (ARIE) -12.5%
= (-$416.85/$19,876.65)*(365/61 days)

3. Best Buy Co Inc.(BBY) -- Continuation Transaction

The transactions history to date for Best Buy Co Inc.(BBY) is as follows:
06/23/2010 Bought 400 BBY @ $36.08
06/23/2010 Sold 4 BBY Jul2010 $37.00 Calls @ $.82
07/17/2010 Jul2010 Options Expired
Note: The closing price of BBY was $34.33 on expiration Friday.
07/22/2010 Sold 4 BBY Aug2010 $35.00 Calls @ $1.06
Note: The price of BBY was $34.68 today when this option was sold.

Two possible overall performance results(including commissions) for Best Buy Co Inc.(BBY) transactions would be as follows:
Stock Purchase Cost: $14,440.95
= ($36.08*400+$8.95 commission)

Net Profit:
(a) Options Income: +$728.10
= 400*($.82+$1.06) - 2*$11.95
(c) Capital Appreciation (If BBY unchanged at $34.68): -$568.95
= ($34.68-$36.08)*400 - $8.95 commissions
(c) Capital Appreciation (If BBY assigned at $35.00): -$440.95
= ($35.00-$36.08)*400 - $8.95 commissions

Total Net Profit(If BBY price unchanged at $34.68): +$159.15
= (+$728.10 +$0.00 -$568.95)
Total Net Profit(If BBY assigned at $35.00): +$287.15
= (+$728.10 +$0.00 -$440.95)

Absolute Return (If BBY unchanged at $34.68): +1.1%
= +$159.15/$14,440.95
Annualized Return If Unchanged (ARIU): +6.8%
= (+$159.15/$14,440.95)*(365/59 days)

Absolute Return if Exercised at $35.00: +2.0%
= +$287.15/$14,440.95
Annualized Return If Exercised (ARIE): +12.3%
= (+$287.15/$14,440.95)*(365/59 days)

4. Cubist Pharmaceuticals(CBST) -- Continuation Transaction

The transactions history to date for Cubist Pharmaceuticals(CBST) is as follows:
06/25/2010 Bought 300 CBST @ $21.31
06/25/2010 Sold 3 CBST Jul2010 $22.50 Calls @ $.50
07/17/2010 Jul2010 Options Expired
Note: The closing price of CBST was $21.37 on expiration Friday.
07/22/2010 Sold 3 CBST Aug2010 $22.50 Calls @ $.60
Note: The price of CBST was $21.24 today when this option was sold.

Two possible overall performance results(including commissions) for the Cubist Pharmaceuticals(CBST) transactions would be as follows:
Stock Purchase Cost: $6,401.95
= ($21.31*300+$8.95 commission)

Net Profit:
(a) Options Income: +$307.60
= (300*($.50+$.60) - 2*$11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $21.24):
-$29.95 = ($21.24-$21.31)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised at $22.50): +$348.05
= ($22.50-$21.31)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $21.24): +$277.65
= (+$307.60 +$0.00 -$29.95)
Total Net Profit(If stock price exercised at $22.50): +$655.65
= (+$307.60 +$0.00 +$348.05)

Absolute Return if Unchanged at $21.24: +4.3%
= +$277.65/$6,401.95
Annualized Return If Unchanged (ARIU) +27.8%
= (+$277.65/$6,401.95)*(365/57 days)

Absolute Return if Exercised at $22.50: +5.6%
= +$655.65/$6,401.95
Annualized Return If Exercised (ARIE) +35.6%
= (+$655.65/$6,401.95)*(365/57 days)

5. Domtar Corp.(UFS) -- Continuation Transaction

The transactions history to date for Domtar Corp.(UFS) is as follows:
06/23/2010 Bought 400 UFS @ $55.10
06/23/2010 Sold 4 UFS Jul2010 $60.00 Calls @ $1.10
07/17/2010 Jul2010 Options Expired
Note: The closing price of UFS was $47.77 on expiration Friday.
07/22/2010 Sold 4 UFS Aug2010 $55.00 Calls @ $1.20
Note: The price of UFS was $50.80 today when these options were sold.

Two possible overall performance results(including commissions) for Domtar Corp.(UFS) transactions would be as follows:
Stock Purchase Cost: $22,048.95
= ($55.10*400+$8.95 commission)

Net Profit:
(a) Options Income: +$896.10
= (400*($1.10+$1.20) - 2*$11.95 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If UFS unchanged at $50.80): -$1,728.95
= ($50.80-$55.10)*400 - $8.95 commissions
(c) Capital Appreciation (If UFS assigned at $55.00): -$48.95
= ($55.00-$55.10)*400 - $8.95 commissions

Total Net Profit(If UFS price unchanged at $50.80): -$832.85
= ($896.10 +$0.00 -$1,728.95)
Total Net Profit(If UFS assigned at $55.00): +$847.15
= (+$896.10 +$0.00 -$48.95)

Absolute Return (If UFS unchanged at $50.80): -3.8%
= -$832.85/$22,048.95
Annualized Return If Unchanged (ARIU): -23.4%
= (-$832.85/$22,048.95)*(365/59 days)

Absolute Return if Exercised at $55.00: +3.8%
= +$847.15/$22,048.95
Annualized Return If Exercised (ARIE): +23.8%
= (+$847.15/$22,048.95)*(365/59 days)

6. DSW Inc.(DSW) -- Continuation Transaction

The transactions history to date for DSW Inc.(DSW) is as follows:
06/22/2010 Bought 300 DSW @ $24.75
06/22/2010 Sold 3 DSW Jul2010 $25.00 Calls @ $1.100
7/17/2010 Jul2010 Options Expired
Note: The closing price of DSW was $23.21 on expiration Friday.
07/22/2010 Sold 3 DSW Aug2010 $25.00 Calls @ $1.05
Note: The price of DSW was $24.86 today when these options were sold.

Two possible overall performance results(including commissions) for the DSW Inc.(DSW) transactions would be as follows:
Stock Purchase Cost: $7,433.95
= ($24.75*300+$8.95 commission)

Net Profit:
(a) Options Income: +$622.60
= (300*($1.10+$1.05) - 2*$11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $24.86):
-$24.05 = ($24.86-$24.75)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised at $25.00): +$66.05
= ($25.00-$24.75)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $24.86): +$598.55
= (+622.60 +$0.00 -$24.05)
Total Net Profit(If stock price exercised at $25.00): +$688.65
= (+$622.60 +$0.00 +$66.05)

Absolute Return if Unchanged at $24.86: +8.1%
= +$598.55/$7,433.95
Annualized Return If Unchanged (ARIU) +49.0%
= (+$598.55/$7,433.95)*(365/60 days)

Absolute Return if Exercised at $25.00: +9.3%
= +$688.65/$7,433.95
Annualized Return If Exercised (ARIE) +56.4%
= (+$688.65/$7,433.95)*(365/60 days)

7. Intel Corporation (INTC) -- Continuation Transaction

The transactions history to date for Intel Corp(INTC) is as follows:
05/21/2010 Bought 300 INTC @ $20.30
05/21/2010 Sold 3 INTC Jun2010 $22.00 Call Options @ $.52
06/21/2010 Sold 3 INTC Jul2010 $22.00 Call Options @$.46
Note: The price of INTC was $21.60 when these options were sold.
7/17/2010 Jul2010 Options Expired
Note: The closing price of INTC was $21.02 on expiration Friday.
07/22/2010 Sold 3 INTC Aug2010 $22.00 Calls @ $.42
Note: The price of INTC was $21.70 today when these options were sold.


Two possible overall performance results(including commissions) for the Intel Corp(INTC) transactions would be as follows:
Stock Purchase Cost: $6,098.95
= ($20.30*300+$8.95 commission)

Net Profit:
(a) Options Income: +$386.40
= 300*($.52+$.46+$.42) - 3*$11.20 commissions
(b) Dividend Income: +$47.25 ($.1575 * 300 shares)
(c) Capital Appreciation (If stock price unchanged at $21.70):
+$411.05 = ($21.70-$20.30)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised at $22.00): +$501.05
= ($22.00-$20.30)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $21.70): +$844.70
= (+$386.40 +$47.25 +$411.05)
Total Net Profit(If stock price exercised at $22.00): +$934.70
= (+$386.40 +$47.25 +$501.05)

Absolute Return (If Stock Unchanged at $21.70): +13.8%
= +$844.70/$6,098.95
Annualized Return If Unchanged (ARIU): +54.9%
= (+$844.70/$6,098.95)*(365/92 days)

Absolute Return if Exercised at $22.00: +15.3%
= +$934.70/$6,098.95
Annualized Return If Exercised (ARIE): +60.8%
= (+$934.70/$6,098.95)*(365/92 days)

8. iShares MSCI China ETF (FXI) -- Continuation Transaction

The transactions history to date for iShares MSCI China ETF (FXI) is as follows:
06/21/2010 Bought 1,100 FXI @ $41.85
06/21/2010 Sold 11 FXI Jul2010 $43.00 Calls @ $.71
7/17/2010 Jul2010 Options Expired
Note: The closing price of FXI was $38.74 on expiration Friday.
07/22/2010 Sold 7 FXI Aug2010 $42.00 Calls @ $.73
07/22/2010 Sold 4 FXI Aug2010 $43.00 Calls @ $.42
Note: The price of FXI was $41.02 today when these options were sold.

Some possible overall performance results(including commissions) for the iShares MSCI China ETF (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 + 700*$.73 + 4008$.40 - ($17.20+$14.20+$11.95) commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If FXI unchanged at $41.02): $-921.95
= ($41.02-$41.85)*1,100 - $8.95 commissions
(c) Capital Appreciation (If FXI closes at $42.50): +$706.05
= ($42.50-$41.85)*1,100 - $8.95 commissions
(c) Capital Appreciation (If all FXI shares are assigned with price above $43.00): +$1,256.05 = ($43.00-$41.85)*1,100 - $8.95 commissions

Total Net Profit(If FXI price unchanged at $41.02): -$158.15
= (+$763.80 +$0.00 -$921.95)
Total Net Profit(If FXI closes at $42.50): +$1,469.85
= (+$763.80 +$0.00 +$706.05)
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 $41.02): -0.3%
= -$158.15/$46,043.95
Annualized Return If Unchanged (ARIU): -2.1%
= (-$158.15/$46,043.95)*(365/61 days)

Absolute Return if FXI closes at $42.50: +3.2%
= +$1,469.85/$46,043.95
Annualized Return If Exercised (ARIE): +19.1%
= (+$1,469.85/$46,043.95)*(365/61 days)

Absolute Return if Exercised at $43.00: +4.4%
= +$2,019.85/$46,043.95
Annualized Return If Exercised (ARIE): +26.2%
= (+$2,019.85/$46,043.95)*(365/61 days)

9. iShares MSCI South Korea ETF (EWY) -- Continuation Transaction

The transactions history to date for iShares MSCI South Korea ETF (EWY) is as follows:
06/21/2010 Bought 400 EWY @ $49.33
06/21/2010 Sold 4 EWY Jul2010 $50.00 Calls @ $.85
7/17/2010 Jul2010 Options Expired
Note: The closing price of EWY was $46.37 on expiration Friday.
07/22/2010 Sold 4 EWY Aug2010 $49.00 Calls @ $1.05
Note: The price of EWY was $47.99 today when these options were sold.

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

Net Profit:
(a) Options Income: +$736.10
= (400*($.85+$1.05) - 2*$11.95 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If EWY unchanged at $47.99): $-544.95
= ($47.99-$49.33)*400 - $8.95 commissions
(c) Capital Appreciation (If EWY assigned at $49.00): -$140.95
= ($49.00-$49.33)*400 - $8.95 commissions

Total Net Profit(If EWY price unchanged at $47.99): +$191.15
= (+$736.10 +$0.00 -$544.95)
Total Net Profit(If EWY assigned at $49.00): +$595.15
= (+$736.10 +$0.00 -$140.95)

Absolute Return (If EWY unchanged at $47.99): +1.0%
= +$191.15/$19,740.95
Annualized Return If Unchanged (ARIU): +5.8%
= (+$191.15/$19,740.95)*(365/61 days)

Absolute Return if Exercised at $49.00: +3.0%
= +$595.15/$19,740.95
Annualized Return If Exercised (ARIE): +18.0%
= (+$587.10/$19,740.95)*(365/61 days)

10. Petrobras (PBR) -- Continuation Transaction

The transactions history to date for Petrobras (PBR) is as follows:
06/21/2010 Bought 300 PBR @ $39.34
06/21/2010 Sold 3 PBR Jul2010 $40.00 Calls @ $1.05
7/17/2010 Jul2010 Options Expired
Note: The closing price of PBR was $34.51 on expiration Friday.
07/22/2010 Sold 3 PBR Aug2010 $38.00 Calls @ $.55
Note: The price of PBR was $36.52 today when these options were sold.

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

Net Profit:
(a) Options Income: +$457.60
= (300*($1.05+$.55) - 2*$11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If PBR unchanged at $36.52): $-854.95
= ($36.52-$39.34)*300 - $8.95 commissions
(c) Capital Appreciation (If PBR assigned at $38.00): -$410.95
= ($38.00-$39.34)*300 - $8.95 commissions

Total Net Profit(If PBR price unchanged at $36.52): -$397.35
= (+$457.60 +$0.00 -$854.95)
Total Net Profit(If PBR assigned at $38.00): +$46.65
= (+$457.60 +$0.00 -$410.95)

Absolute Return (If PBR unchanged at $36.52): -3.4%
= -$397.35/$11,810.95
Annualized Return If Unchanged (ARIU): -20.1%
= (-$397.35/$11,810.95)*(365/61 days)

Absolute Return if Exercised at $38.00: +0.4%
= +$46.65/$11,810.95
Annualized Return If Exercised (ARIE): +2.4%
= (+$46.65/$11,810.95)*(365/61 days)

11. Symantec Corporation(SYMC) -- Continuation Transaction

The transactions history to date for Symantec Corporation(SYMC) is as follows:
06/23/2010 Bought 300 SYMC @ $14.70
06/23/2010 Sold 3 SYMC Jul2010 $15.00 Call Options @ $.31
7/17/2010 Jul2010 Options Expired
Note: The closing price of SYMC was $14.59 on expiration Friday.
07/22/2010 Sold 3 SYMC Aug2010 $15.00 Calls @ $.54
Note: The price of SYMC was $14.86 today when these options were sold.


Two possible overall performance results(including commissions) for the Symantec Corporation(SYMC) transactions would be as follows:
Stock Purchase Cost: $4,418.95
= ($14.70*300+$8.95 commission)

Net Profit:
(a) Options Income: +$232.60
= 300*($.31+$.54) - 2*$11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $14.86):
+$39.05 = ($14.86-$14.70)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised at $15.00): +$81.05
= ($15.00-$14.70)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $14.86): +$271.85
= (+$232.80 +$0.00 +$39.05)
Total Net Profit(If stock price exercised at $15.00): +$313.85
= (+$232.80 +$0.00 +$81.05)

Absolute Return if Unchanged at $14.86: +6.2%
= +$271.85/$4,418.95
Annualized Return If Unchanged (ARIU) +38.1%
= (+$271.85/$4,418.95)*(365/59 days)

Absolute Return if Exercised at $15.00: +7.1%
= +$313.85/$4,418.95
Annualized Return If Exercised (ARIE) +43.9%
= (+$313.85/$4,418.95)*(365/59 days)

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