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Tuesday, January 2, 2018

Closed Postion in Financial Select Sector SPDR Fund

Last Friday, the December 29th, 2017 Covered Calls position in the Financial Select Sector SPDR Fund (ticker symbol XLF) expired with the stock price at $27.91, below the $28.00 strike price -- so the Call options expired and the 1,000 shares were retained in the Covered Calls Advisor's Portfolio.  The stock moved higher this morning at the market opening and the position was closed out by selling the 1,000 shares at $28.00.  As detailed below, this position achieved a return-on-investment result of +1.8% absolute return in 18 days (equivalent to a +36.7% annualized return-on-investment).

Financial Select Sector SPDR Fund (XLF) -- Covered Calls Position Closed
The transactions were as follows:
12/14/2017 Bought 1,000 shares of Financial Select Sector SPDR Fund shares @ $27.80 
12/14/2017 Sold 10 XLF Dec 29th, 2017 $28.00 Call options @ $.18 per share
Note: this was a simultaneous Buy/Write transaction and the Implied Volatility of these Call options was 14.8 
12/15/2017 Ex-Distribution of $128.30 = $.1283 per share x 1,000 shares
12/29/2017 10 XLF Call options expired
Note: the price of XLF was $27.91 at expiration
01/02/2018 Sold 1,000 share of XLF @ $28.00 to close position

The overall performance result (including commissions) was as follows:
Covered Calls Cost Basis: $27,811.65
= ($27.80 - $.18)* 1,000 shares + $11.65 commission

Net Profit Components:
(a) Options Income: +$180.00
= ($.18* 1,000 shares)
(b) Distribution Income: +$128.30
= $.1283 per share * 1,000 shares 
(c) Capital Appreciation (XLF sold at $28.00 on 1/2/2018): +$195.05
= ($28.00 -$27.80)* 1,000 shares - $4.95 commission


Total Net Profit: +$503.35
= (+$180.00 options income +$128.30 distribution income +$195.05 capital appreciation)

Absolute Return: +1.8%= +$503.35/$27,811.65
Equivalent Annualized Return: +36.7%
= (+$503.35/$27,811.65)*(365/18 days)

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