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Monday, March 9, 2015

Delta Air Lines Inc. Position Closed

The March 6, 2015 weekly covered calls position in Delta Air Lines Inc. expired last Friday with the stock below the $44.00 strike price.  Today, the position was closed out by selling the 300 shares in the Covered Calls Advisor portfolio.  The position was closed out since there is already an existing short Puts position with Delta in the portfolio with a Mar2015 expiration and at the $44.00 strike price.

As detailed below, this closed investment yielded a +1.3% absolute return in 10 days (which is equivalent to a +46.7% annualized return-on-investment).  The associated transactions and financial results are:

Delta Air Lines Inc. (DAL) -- Closed
The transactions were as follows:
02/27/2015 Sold 3 Delta Air Lines Inc. Mar 6, 2015 $44.00 Puts @ $.69
Note: The price of DAL was $45.35 when this transaction was executed.
03/06/2015 3 DAL Puts assigned, so 300 shares of DAL purchased at $44.00 strike price
Note: the price of Delta was $43.78 upon Friday's option expiration
03/09/2015 Sold 300 Delta Air Lines Inc. stock at $43.94

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

The overall performance result (including commissions) for this transaction was as follows:
100% Cash-Secured Cost Basis: $13,200.00
= $44.00*300
Note:  the price of DAL was $43.78 when these Put options were assigned.

Net Profit:
(a) Options Income: +$195.80
= ($.69*300 shares) - $11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation: -$26.95
= ($43.94-$44.00)*300 shares - $8.95 commission

Total Net Profit: +$168.85
= (+$195.80 +$0.00 -$26.95)

Absolute Return: +1.3%
= +$168.85/$13,200.00
Annualized Return: +46.7%
= (+$177.80/$13,200.00 )*(365/10 days)