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Friday, November 26, 2010

Oshkosh Corp.(OSK) -- Continuation Transaction

The Covered Calls Advisor initially established an Oct2010 covered calls position in Oshkosh Corp.(OSK). This position was subsequently rolled-up-and-out to a Nov2010 covered calls position, and this position expired last Friday out-of-the-money. Today, a decision was made to retain the 300 shares of Oshkosh Corp.(OSK) and to establish a Dec2010 covered calls position. The transactions history for OSK as well as some possible results for this investment is as follows:

1. Oshkosh Corp.(OSK) -- Continuation
The transactions history to date for Oshkosh Corp.(OSK) is as follows:
09/27/2010 Bought 300 OSK @ $26.46
09/27/2010 Sold 3 OSK Oct2010 $27.00 Calls @ $.80
10/08/2010 Buy-to-Close (BTC) 3 OSK Oct2010 $27.00 Call Options @ $3.10
10/08/2010 Sell-to-Open (STO) 3 OSK Nov2010 $30.00 Call Options @ $1.70
11/20/2010 Nov2010 Options Expired
Note: The closing price of OSK was $29.16 on expiration Friday.
11/26/2010 Sold 3 IP Dec2010 $30.00 Calls @ $.70
Note: The price of IP was $29.33 when the call options were sold.

Two possible overall performance results(including commissions) for the Oshkosh Corp.(OSK) transactions would be as follows:
Stock Purchase Cost: $7,946.95
= ($26.46*300+$8.95 commission)

Net Profit:
(a) Options Income: -$44.80
= (300*($.80-$3.10+$1.70+$.70) - 4*$11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $29.33): +$852.05
= ($29.33-$26.46)*300 - $8.95 commissions
(c) Capital Appreciation (If assigned at $30.00): +$1,053.05
= ($30.00-$26.46)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $29.33): +$807.25
= (-$44.80 +$0.00 +$852.05)
Total Net Profit(If stock price assigned at $30.00): +$1,008.25
= (-$44.80 +$0.00 +$1,053.05)

Absolute Return if Stock Price Unchanged at $29.33: +10.6%
= +$839.45/$7,946.95
Annualized Return If Unchanged (ARIU): +47.0%
= (+$839.45/$7,946.95)*(365/82 days)

Absolute Return if Assigned at $30.00: +12.7%
= +$1,008.25/$7,946.95
Annualized Return If Assigned (ARIA): +56.5%
= (+$1,008.25/$7,946.95)*(365/82 days)

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