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Monday, January 5, 2015

Established New Short 100% Cash-Secured Puts Position in Apple Inc.

Today, the Covered Calls Advisor established a new position in Apple Inc. (Symbol AAPL) by selling 2 Jan9th2015 $105.00 Put options. This is a Weekly position and reflects that the Covered Calls Advisor would be very willing to purchase Apple Inc. shares at $105.00 (for future covered calls investments) upon the close of business this Friday if the stock continues to decline to below the $105.00 strike price.  If the stock remains above $105 by the market close this Friday, then the $213.55 profit (a 1.0% absolute return-on-investment result in only 5 days) as detailed below will have been achieved.  This transaction and the potential return-on-investment result is:

1.  Apple Inc. (AAPL) -- New Position
The transaction was as follows:
01/05/2015 Sold 2 Apple Inc. Jan 9, 2015 $105.00 Puts @ $1.12
Note: The price of AAPL was $106.53 when this transaction was executed.

The Covered Calls Advisor does not use margin, so the detailed information on this position and some potential results shown below reflect the fact that this position was established using 100% cash securitization for the two Put options sold.

A possible overall performance result (including commissions) for this transaction would be as follows:
100% Cash-Secured Cost Basis: $21,000.00
= $105.00*200
Note:  the price of AAPL was $106.53 when these Put options were sold.

Net Profit:
(a) Options Income: +$213.55
= ($1.12*200 shares) - $10.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If AAPL is above $105.00 strike price at Jan 9th, 2015 expiration): +$0.00
= ($105.00-$105.00)*200 shares

Total Net Profit (If AAPL is above $105.00 strike price upon this Friday's options expiration): +$213.55
= (+$213.55 +$0.00 +$0.00)

Absolute Return (If AAPL is above $105.00 strike price at Jan 9th, 2015 options expiration): +1.0%
= +$213.55/$21,000.00