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Tuesday, April 3, 2012

Continuation Transaction -- iShares MSCI China ETF (FXI)

Today, the covered calls position in iShares MSCI China ETF (FXI) was re-established by selling 10 $38.00 calls with an Apr2012 options expiration. The detailed transactions history as well as possible performance results is as follows:

The transaction history is as follows:
04/18/2011 Bought 1,000 FXI @ $44.80
04/20/2011 Sold 10 FXI May2011 $47.00 Calls @ $.49
Note: the price of FXI was $45.88 when the calls were sold.
05/31/2011 Sold 10 FXI Jul2011 $47.00 Calls @ $.37
Note: The price of FXI was $45.18 when these call options were sold.
06/21/2011 FXI ETF distribution of $.68555 per share
07/16/2011 Jul2011 FXI options expired.
07/18/2011 Sold 10 FXI Aug2011 $42.00 Calls @$.71
08/20/2011 Aug2011 FXI options expired.
08/22/2011 Sold 10 FXI Sep2011 $42.00 Calls @ $.65
09/17/2011 Sep2011 FXI options expired.
09/20/2011 Sold 10 FXI Oct2011 $38.00 Calls @ $.47
10/22/2011 Oct2011 options expired.
10/26/2011 Sold 10 FXI Nov2011 $37.00 Calls @ $.86
11/19/2011 Nov2011 FXI options expired.
11/30/2011 Sold 10 FXI Jan2012 $38.00 Calls @ $1.10
Note: the price of FXI was $36.42 today when these call options were sold.
12/20/2011 Ex-Distribution $79.40 = $.0794 * 1,000 shares
01/20/2012 Bought-to-Close 10 FXI Jan2012 $38.00 Calls @ $.68
Note: the price of FXI was $38.67 when these call options were bought.
01/20/2012 Sold 10 FXI Feb2012 $40.00 Calls @ $.49
Note: the price of FXI was $38.72 today when these call options were sold.
02/17/2012 Bought-to-Close 10 FXI Feb2012 $40.00 Calls @ $.27
02/17/2012 Sold-to-Open 10 FXI Mar2012 $40.00 Calls @ $1.30
Note: the price of FXI was $40.25 when these transactions were made.
03/17/2012 Mar2012 FXI options expired.
04/03/2012 Sold 10 FXI Apr2012 $38.00 Calls @ $.44
Note: the price of FXI was $37.31 when these options were sold.

Two possible overall performance result(including commissions) for this iShares MSCI China ETF (FXI) position is as follows:
Stock Purchase Cost: $44,808.95
= ($44.80*1,000+$16.45 commission)

Net Profit:
(a) Options Income: +$5,803.00
= (1,000*($.49+$.37+$.71+$.65+$.47+$.86+$1.10-$.68+$.49-$.27+$1.30+$.44) - 10*$12.70 commissions)
(b) Distribution Income: $767.95 = ($.68555+$.0794) * 1,000 shares
(c) Capital Appreciation (If FXI price unchanged at $37.31 at expiration): -$7,498.95
= ($37.31-$44.80)*1,000 - $8.95 commissions
(c) Capital Appreciation (If FXI assigned at $38.00 at expiration): -$6,808.95
= ($38.00-$44.80)*1,000 - $8.95 commissions

Total Net Profit (If FXI unchanged at $37.31): -$928.00
= (+$5,803.00 +$767.95 -$7,498.95)
Total Net Profit (If FXI assigned at $38.00): -$238.00
= (+$5,803.00 +$767.95 -$6,808.95)

Absolute Return (If FXI unchanged at $37.31 at expiration): -2.1%
= -$928.00/$44,808.95
Annualized Return If Assigned (ARIA): -2.0%
= (-$928.00/$44,808.95)*(365/370 days)

Absolute Return (If FXI assigned at $38.00 at expiration): -0.5%
= -$238.00/$44,808.95
Annualized Return If Assigned (ARIA): -0.5%
= (-$238.00/$44,808.95)*(365/370 days)

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