1. September 2010 Year-to-Date Results:
September was a blockbuster month in the stock market with an 8.91% increase in the Russell 3000 index. By selling near-month calls that on average were approximately 2% out-of-the-money, the Covered Calls Advisor Portfolio was able to participate in some of the capital gains achieved by the market and thus also achieved strong performance in September with a 8.74% increase.
As shown in the table below, the Covered Calls Advisor Portfolio (CCAP) has underperformed the Russell 3000 benchmark by 5.25 percentage points [+3.32%-(-1.93%)] so far in 2010:
CCAP Absolute Return (Jan 1st through September 30th, 2010) = -1.93%
Benchmark Russell 3000(IWV) Absolute Return(Jan 1st through September 30th, 2010) = +3.32%
2. Prior Years Results:
The Covered Calls Advisor Portfolio (CCAP) began in September, 2007. The annualized returns achieved for 2007, 2008, and 2009 compared with the Russell 3000 benchmark results were as follows:
As a reminder, the Covered Calls Advisor Portfolio is not identical to the advisor's personal portfolio. However, it does provide a comparable overall portfolio return result since all positions in the CCAP are also held in the personal portfolio. To ensure comparability, all transaction dates and transaction prices herein are identical to those that were established in the Covered Calls Advisor's personal portfolio. The primary difference between the two accounts is the total number of shares held for each equity. This approach is used to preserve the confidentiality of the total value of the Covered Call Advisor's personal portfolio.
The Covered Calls Advisor uses a bottom-line performance measure to determine overall portfolio investment performance results -- it is called 'Total Account Value Return Percent. Here's an example to aid understanding of how the overall portfolio performance is determined:
If the total CCAP portfolio value was $100,000 at the beginning of the calendar year and $110,000 at the end of that year (and with no deposits or withdrawals having been made), then the 'Total Account Value Return Percent' would be +10.0% [($110,000-$100,000)/$100,000]*100.
If you have any comments or questions, please feel free to submit them -- they are always welcomed. Click the 'comments' link below. If you prefer confidential communications, my email address is listed at the top-right sidebar of this blog site.
Regards and Godspeed,