One-month, year-to-date, and prior year performance results of the Covered Calls Advisor Portfolio (CCAP) are presented below. In each instance, CCAP results are compared against the benchmark portfolio which is the Schwab MarketTrack Balanced Portfolio (SWBGX).
1. One-Month Result (May 2008):
At market close on 05/30/2008, the total Covered Calls Advisor Portfolio (CCAP) value was $253,396.82, a $6,897.73 increase in the overall portfolio value compared with the $246,499.09 at the end of April(04/30/2008).
CCAP May 2008 Absolute Return = +2.8%
($253,396.82-$246,499.09)/$246,499.09
Benchmark Comparison: April 2008 Absolute Return for SWBGX = +2.2%
($16.79-$16.42)/$16.42
2. 2008 Year-to-Date Results (Jan 1st through May 31st, 2008):
CCAP 2008 Year-to-Date Absolute Return = -1.7%
($253,396.82-$257,886.51)/$257,886.51
Benchmark (SWBGX) 2008 Year-to-Date Absolute Return =
0.0%
($16.79-$16.79)/$16.79
3. Prior Year Results (2007):
The Covered Calls Advisor Portfolio (CCAP) was initiated on September 14th, 2007 with a beginning balance of $250,000. The CCAP balance at year-end (12/31/07) was $257,886.51. Below are the returns of the CCAP for this 2007 timeframe compared with the results of the SWBGX benchmark during the same time period.
CCAP 2007 Absolute Return = +3.2%
($257,886.51-$250,000.00)/$250,000.00
Benchmark (SWBGX) 2007 Absolute Return = +0.7%
($16.79-$16.68)/$16.68
The corresponding annualized return for the 108 days the CCAP existed in 2007 (between Sept 14, 2007 and Dec 31, 2007) was:
CCAP 2007 Annualized Return = +10.7%
[($257,886.51-$250,000.00)/$250,000.00]*(365/108 days)
Benchmark (SWBGX) 2007 Annualized Return = +2.2%
[($16.79-$16.68)/$16.68]*(365/108 days)
This Advisor's Overall Market Meter shows that a SLIGHTLY BEARISH investment posture is appropriate at this time. The corresponding covered calls investing approach is to write near-month primarily slightly in-the-money covered calls.
Saturday, May 31, 2008
Thursday, May 29, 2008
Continuation Transaction -- Humana
The following transaction was made today to establish a covered calls position against the 200 shares of HUM:
05/29/08 Covered Calls Continuation Transaction -- STO 2 Jun08 50 Calls @ $2.50
The Transactions History to date is as follows:
02/20/08 Initial Stock Purchase Transaction -- Bought 200 HUM @ $68.65
02/20/08 Initial Calls Sold Transaction -- Sold 2 HUM Mar08 70 Calls @ $2.20
03/22/08 Mar08 Options Expired
03/24/08 Covered Calls Continuation Transaction -- Sold 2 Apr08 50 Calls @ $1.25
Note: Price of HUM was $46.10 when the calls were sold today.
04/19/08 Apr08 Options Expired
04/28/08 Covered Calls Continuation Transaction -- STO 2 May08 45 Calls @ $2.10
Note: Price of HUM was $45.35 when the calls were sold today.
05/17/08 May08 Options Expired
05/29/08 Covered Calls Continuation Transaction -- STO 2 Jun08 50 Calls @ $2.50
Note: Price of HUM was $50.80 when the calls were sold today.
The overall performance results(including commissions)for the HUM transactions through the Jun08 expiration would be as follows:
Stock Purchase Cost: $13,739.95
($68.65*200+$9.95 commission)
Net Profit:
(a) Options Income: $1,564.20 (200*($2.20+$1.25+$2.10+2.50 - 4*$11.45 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation(If exercised): -$3,747.90
= ($50.00-$68.65)*200 - 2*$8.95 commissions
Total Net Profit(If stock price exercised): -$2,183.70
= (+$1,564.20+$0-$3,747.90)
Annualized Return If Exercised (ARIE) -47.5%
(-$2,183.70/$13,739.95)*(365/122 days)
05/29/08 Covered Calls Continuation Transaction -- STO 2 Jun08 50 Calls @ $2.50
The Transactions History to date is as follows:
02/20/08 Initial Stock Purchase Transaction -- Bought 200 HUM @ $68.65
02/20/08 Initial Calls Sold Transaction -- Sold 2 HUM Mar08 70 Calls @ $2.20
03/22/08 Mar08 Options Expired
03/24/08 Covered Calls Continuation Transaction -- Sold 2 Apr08 50 Calls @ $1.25
Note: Price of HUM was $46.10 when the calls were sold today.
04/19/08 Apr08 Options Expired
04/28/08 Covered Calls Continuation Transaction -- STO 2 May08 45 Calls @ $2.10
Note: Price of HUM was $45.35 when the calls were sold today.
05/17/08 May08 Options Expired
05/29/08 Covered Calls Continuation Transaction -- STO 2 Jun08 50 Calls @ $2.50
Note: Price of HUM was $50.80 when the calls were sold today.
The overall performance results(including commissions)for the HUM transactions through the Jun08 expiration would be as follows:
Stock Purchase Cost: $13,739.95
($68.65*200+$9.95 commission)
Net Profit:
(a) Options Income: $1,564.20 (200*($2.20+$1.25+$2.10+2.50 - 4*$11.45 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation(If exercised): -$3,747.90
= ($50.00-$68.65)*200 - 2*$8.95 commissions
Total Net Profit(If stock price exercised): -$2,183.70
= (+$1,564.20+$0-$3,747.90)
Annualized Return If Exercised (ARIE) -47.5%
(-$2,183.70/$13,739.95)*(365/122 days)
Tuesday, May 27, 2008
Established Accenture Ltd. Covered Calls
A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) as follows:
Established Accenture Ltd.(ACN) Covered Calls for Jul08.
05/23/08 Bought 1000 ACN @ $36.70
05/27/08 Sold 10 ACN Jul08 $40 Calls @ $.80
Annualized Return If Stock Price Unchanged (ARIU): +15.0%
Annualized Return If Exercised (ARIE): +76.9%
Downside Breakeven Protection: 2.2%
Established Accenture Ltd.(ACN) Covered Calls for Jul08.
05/23/08 Bought 1000 ACN @ $36.70
05/27/08 Sold 10 ACN Jul08 $40 Calls @ $.80
Annualized Return If Stock Price Unchanged (ARIU): +15.0%
Annualized Return If Exercised (ARIE): +76.9%
Downside Breakeven Protection: 2.2%
Friday, May 23, 2008
Bought Dover Corp, Honeywell, and Nike Covered Calls
Three new covered call positions were established today in the Covered Calls Advisor Portfolio(CCAP) as follows:
1. Dover Corporation Covered Calls Established for JUL08
05/23/08 Bought 500 DOV @ $52.13
05/23/08 Sold 5 DOV Jul08 $55 Calls @ $1.00
Annualized Return If Stock Price Unchanged (ARIU): +14.7%
Annualized Return If Exercised (ARIE): +50.0%
Downside Breakeven Protection: 2.3%
2. Honeywell Covered Calls Established for Jun08
05/23/08 Bought 500 HON @ $58.89
05/23/08 Sold 5 HON Jun08 $60 Calls @ $1.20
Annualized Return If Stock Price Unchanged (ARIU): +25.6%
Annualized Return If Exercised (ARIE): +49.4%
Downside Breakeven Protection: 2.0%
3. Nike Covered Calls Established for Jun08
05/23/08 Bought 500 Nike @ $64.92
05/23/08 Sold 5 NKE Jun08 $65 Calls @ $1.70
Annualized Return If Stock Price Unchanged (ARIU): +37.4%
Annualized Return If Exercised (ARIE): +39.0%
Downside Breakeven Protection: 3.0%
1. Dover Corporation Covered Calls Established for JUL08
05/23/08 Bought 500 DOV @ $52.13
05/23/08 Sold 5 DOV Jul08 $55 Calls @ $1.00
Annualized Return If Stock Price Unchanged (ARIU): +14.7%
Annualized Return If Exercised (ARIE): +50.0%
Downside Breakeven Protection: 2.3%
2. Honeywell Covered Calls Established for Jun08
05/23/08 Bought 500 HON @ $58.89
05/23/08 Sold 5 HON Jun08 $60 Calls @ $1.20
Annualized Return If Stock Price Unchanged (ARIU): +25.6%
Annualized Return If Exercised (ARIE): +49.4%
Downside Breakeven Protection: 2.0%
3. Nike Covered Calls Established for Jun08
05/23/08 Bought 500 Nike @ $64.92
05/23/08 Sold 5 NKE Jun08 $65 Calls @ $1.70
Annualized Return If Stock Price Unchanged (ARIU): +37.4%
Annualized Return If Exercised (ARIE): +39.0%
Downside Breakeven Protection: 3.0%
Thursday, May 22, 2008
Continuation Transaction -- AU Optronics
The following transaction was made yesterday to establish a covered calls position against the 1000 shares of AUO:
05/22/08 Covered Calls Continuation Transaction -- STO 10 Jun08 $20 Calls @ $.40
The Transactions History to date is as follows:
05/01/08 Initial Stock Purchase Transaction -- Bought 1000 AUO @ $19.778
05/01/08 Initial Calls Sold Transaction -- Sold 10 AUO May08 20 Calls @ $.60
05/17/08 May08 Options Expired. Note: AUO closed at $19.31 on this expiration Friday.
05/22/08 Covered Calls Continuation Transaction -- Sold 10 Jun08 20 Calls @ $.40
The overall performance results(including commissions)for the AUO transactions through the Jun08 expiration would be as follows:
Stock Purchase Cost: $19,786.95
($19.778*1000+$8.95 commission)
Net Profit:
(a) Options Income: $967.10 (1000*($.60+$.40 - 2*$16.45 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation (If exercised): +$204.10
= ($20.00-$19.778)*1000 - 2*$8.95 commissions
Total Net Profit(If stock price exercised): +$1,171.20
= (+$967.10+$0+$204.10)
Annualized Return If Exercised (ARIE) +42.4%
(+$1,171.20/$19,786.95)*(365/51 days)
05/22/08 Covered Calls Continuation Transaction -- STO 10 Jun08 $20 Calls @ $.40
The Transactions History to date is as follows:
05/01/08 Initial Stock Purchase Transaction -- Bought 1000 AUO @ $19.778
05/01/08 Initial Calls Sold Transaction -- Sold 10 AUO May08 20 Calls @ $.60
05/17/08 May08 Options Expired. Note: AUO closed at $19.31 on this expiration Friday.
05/22/08 Covered Calls Continuation Transaction -- Sold 10 Jun08 20 Calls @ $.40
The overall performance results(including commissions)for the AUO transactions through the Jun08 expiration would be as follows:
Stock Purchase Cost: $19,786.95
($19.778*1000+$8.95 commission)
Net Profit:
(a) Options Income: $967.10 (1000*($.60+$.40 - 2*$16.45 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation (If exercised): +$204.10
= ($20.00-$19.778)*1000 - 2*$8.95 commissions
Total Net Profit(If stock price exercised): +$1,171.20
= (+$967.10+$0+$204.10)
Annualized Return If Exercised (ARIE) +42.4%
(+$1,171.20/$19,786.95)*(365/51 days)
Tuesday, May 20, 2008
May 2008 Expiration Transactions
The Covered Calls Advisor Portfolio (CCAP) contained a total of 10 positions with May 2008 expirations, with the following results:
- 6 positions (BK,BA,DIS,EEM,MDR,NOK) closed in-the-money. The calls were exercised and the stock was called away. The annualized percent return-on-investment(ROI) results for these positions were:
Bank of New York Mellon +47.3%
Boeing +1.9%
Disney +43.4%
iShares MSCI Emerging Markets ETF +30.4%
McDermott International +98.8%
Nokia +83.3%
- 4 positions in the CCAP (AUO,CTB,HUM, and MSFT) ended out-of-the-money. Decisions will be made to either sell the stock, or to keep the stock and sell calls to establish Jun08 covered call positions. The related transactions will be made during the next few days and the actual transactions will be posted on this blog site on the same day they occur.
Details for the six exercised positions were as follows:
1. Bank of New York Mellon -- Closed
Transactions History:
04/22/08 Initial Stock Purchase Transaction -- Bought 500 BK @ $40.67
04/22/08 Initial Calls Sold Transaction -- Sold 5 BK May08 40 Calls @ $2.05
05/17/08 Options Exercised -- STC 500 BK @ $40.00
[Note: BK stock closed on expiration Friday (5/16/08) at $45.55)]
The overall performance results(including commissions)for the BK transactions through the May08 expiration were as follows:
Stock Purchase Cost: $20,343.95
($40.67*500+$8.95 commission)
Net Profit:
(a) Options Income: $1,012.30 (500*$2.05 - $12.70 commissions)
(b) Dividend Income: $0.00
(c) Capital Appreciation: -$352.90
= ($40.00-$40.67)*500 - 2*$8.95 commissions
Total Net Profit: +$659.40
= ($1,012.30+$0.00-$352.90)
BK Annualized Return on Investment: +47.3%
(+$659.40/$20,343.95)*(365/25 days)
2. Boeing -- Closed
The Transactions History to date is as follows:
02/20/08 Initial Stock Purchase Transaction -- Bought 200 BA @ $84.35
02/20/08 Initial Sold Calls Transaction -- Sold 2 BA Mar08 85 Calls @ $2.40
03/22/08 Mar08 Options Expired
03/24/08 Covered Calls Continuation Transaction -- Sold 2 Apr08 80 Calls @ $.85
Note: The price of BA was $75.40 when calls were written on 3/24/08.
04/19/08 Apr08 Options Expired
04/21/08 Covered Calls Continuation Transaction -- Sold 2 May08 80 Calls @ $1.75
Note: The price of BA was $78.90 when the calls were written on 4/21/08.
05/17/08 Options Exercised -- STC 200 BA @ $80.00
[Note: BA stock closed on expiration Friday (5/16/08) at $85.17)]
The overall performance results(including commissions)for the BA transactions through the May08 expiration are as follows:
Stock Purchase Cost: $16,879.95
($84.35*200+$9.95 commission)
Net Profit:
(a) Options Income:+$965.65 (200*$2.40+ 200*$.85+ 200*$1.75- 3*$11.45 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation: -$889.90
= ($80.00-$84.35)*200 - 2*$9.95 commissions
Total Net Profit: +$75.75
= ($965.65 +$0 -$889.90)
BA Annualized Return on Investment: +1.9%
(+$75.75/$16,879.95)*(365/87 days)
3. Disney -- Closed
The Transactions History to date is as follows:
02/20/08 Initial Stock Purchase Transaction -- Bought 600 DIS @ $32.09
02/20/08 Initial Calls Sold Transaction -- Sold 6 DIS Mar08 32.5 Calls @ $.80
03/22/08 Mar08 Options Expired
03/24/08 Covered Calls Continuation Transaction -- Sold 6 Apr08 32.5 Calls @ $.65
Note: The price of DIS was $31.85 when the calls were written on 3/24/08.
04/19/08 Apr08 Options Expired
04/21/08 Covered Calls Continuation Transaction -- Sold 6 May08 32.5 Calls @ $.50
Note: The price of DIS was $31.35 when the calls were written on 4/21/08.
05/17/08 Options Exercised -- STC 600 DIS @ $32.50
[Note: DIS stock closed on expiration Friday (5/16/08) at $34.91)]
The overall performance results(including commissions)for the DIS transactions through the May08 expiration are as follows:
Stock Purchase Cost: $19,263.95
($32.09*600+$9.95 commission)
Net Profit:
(a) Options Income: +$1,126.65 (600*$.80 +600*$.65 +600*$.50 - 3*$14.45 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation: +$226.10
= ($32.50-$32.09)*600 - 2*$9.95 commissions
Total Net Profit: +$1,352.75
= ($1,126.65 + $0 +$226.10)
DIS Annualized Return on Investment: +43.4%
(+$1,352.75/$19,263.95)*(365/59 days)
4. iShares MSCI Emerging Markets ETF
04/28/08 Bought 100 EEM @ $145.30
04/28/08 Sold 1 EEM May08 $140 Call @ $7.90
Transactions History:
04/28/08 Initial Stock Purchase Transaction -- Bought 100 EEM @ $145.30
04/22/08 Initial Calls Sold Transaction -- Sold 1 EEM May08 $140 Calls @ $7.90
05/17/08 Options Exercised -- STC 100 EEM @ $140.00
[Note: EEM ETF closed on expiration Friday (5/16/08) at $155.10)]
The overall performance results(including commissions)for the EEM transactions through the May08 expiration were as follows:
Stock Purchase Cost: $14,538.95
($145.30*100+$8.95 commission)
Net Profit:
(a) Options Income: $780.30 (100*$7.90 - $9.70 commissions)
(b) Dividend Income: $0.00
(c) Capital Appreciation: -$547.90
= ($140.00-$145.30)*100 - 2*$8.95 commissions
Total Net Profit: +$230.40
= ($780.30+$0.00-$547.90)
EEM Annualized Return on Investment: +30.4%
(+$230.40/$14,538.95)*(365/19 days)
5. McDermott International -- Closed
Transactions History:
04/28/08 Initial Stock Purchase Transaction -- Bought 300 MDR @ $59.16
04/28/08 Initial Calls Sold Transaction -- Sold 3 MDR May08 60 Calls @ $2.30
05/17/08 Options Exercised -- STC 300 MDR @ $60.00
[Note: MDR stock closed on expiration Friday (5/16/08) at $60.36)]
The overall performance results(including commissions)for the MDR transactions through the May08 expiration were as follows:
Stock Purchase Cost: $17,756.95
($59.16*300+$8.95 commission)
Net Profit:
(a) Options Income: $678.80 (300*$2.30 - $11.20 commissions)
(b) Dividend Income: $0.00
(c) Capital Appreciation: +$234.10
= ($60.00-$59.16)*300 - 2*$8.95 commissions
Total Net Profit: +$912.90
= ($678.80+$0.00+$234.10)
MDR Annualized Return on Investment: +98.8%
(+$912.90/$17,756.95)*(365/19 days)
6. Nokia -- Closed
Transactions History:
04/21/08 Initial Stock Purchase Transaction -- Bought 1000 NOK @ $29.07
04/21/08 Initial Calls Sold Transaction -- Sold 10 NOK May08 29 Calls @ $1.05
05/09/08 Ex-Dividend Date $.7802 * 1000 shares = $780.20 dividend income
05/17/08 Options Exercised -- STC 1000 BK @ $29.00
[Note: NOK stock closed on expiration Friday (5/16/08) at $29.17)]
The overall performance results(including commissions)for the NOK transactions through the May08 expiration were as follows:
Stock Purchase Cost: $29,078.95
($29.07*1000+$8.95 commission)
Net Profit:
(a) Options Income: $1,033.55 (1000*$1.05 - $16.45 commissions)
(b) Dividend Income: $780.20 (1000 * $.7802)
(c) Capital Appreciation: -$87.90
= ($29.00-$29.07)*1000 - 2*$8.95 commissions
Total Net Profit: +$1,725.85
= ($1,033.55+$780.20-$87.90)
NOK Annualized Return on Investment: +83.3%
(+$1,725.85/$29,078.95)*(365/26 days)
- 6 positions (BK,BA,DIS,EEM,MDR,NOK) closed in-the-money. The calls were exercised and the stock was called away. The annualized percent return-on-investment(ROI) results for these positions were:
Bank of New York Mellon +47.3%
Boeing +1.9%
Disney +43.4%
iShares MSCI Emerging Markets ETF +30.4%
McDermott International +98.8%
Nokia +83.3%
- 4 positions in the CCAP (AUO,CTB,HUM, and MSFT) ended out-of-the-money. Decisions will be made to either sell the stock, or to keep the stock and sell calls to establish Jun08 covered call positions. The related transactions will be made during the next few days and the actual transactions will be posted on this blog site on the same day they occur.
Details for the six exercised positions were as follows:
1. Bank of New York Mellon -- Closed
Transactions History:
04/22/08 Initial Stock Purchase Transaction -- Bought 500 BK @ $40.67
04/22/08 Initial Calls Sold Transaction -- Sold 5 BK May08 40 Calls @ $2.05
05/17/08 Options Exercised -- STC 500 BK @ $40.00
[Note: BK stock closed on expiration Friday (5/16/08) at $45.55)]
The overall performance results(including commissions)for the BK transactions through the May08 expiration were as follows:
Stock Purchase Cost: $20,343.95
($40.67*500+$8.95 commission)
Net Profit:
(a) Options Income: $1,012.30 (500*$2.05 - $12.70 commissions)
(b) Dividend Income: $0.00
(c) Capital Appreciation: -$352.90
= ($40.00-$40.67)*500 - 2*$8.95 commissions
Total Net Profit: +$659.40
= ($1,012.30+$0.00-$352.90)
BK Annualized Return on Investment: +47.3%
(+$659.40/$20,343.95)*(365/25 days)
2. Boeing -- Closed
The Transactions History to date is as follows:
02/20/08 Initial Stock Purchase Transaction -- Bought 200 BA @ $84.35
02/20/08 Initial Sold Calls Transaction -- Sold 2 BA Mar08 85 Calls @ $2.40
03/22/08 Mar08 Options Expired
03/24/08 Covered Calls Continuation Transaction -- Sold 2 Apr08 80 Calls @ $.85
Note: The price of BA was $75.40 when calls were written on 3/24/08.
04/19/08 Apr08 Options Expired
04/21/08 Covered Calls Continuation Transaction -- Sold 2 May08 80 Calls @ $1.75
Note: The price of BA was $78.90 when the calls were written on 4/21/08.
05/17/08 Options Exercised -- STC 200 BA @ $80.00
[Note: BA stock closed on expiration Friday (5/16/08) at $85.17)]
The overall performance results(including commissions)for the BA transactions through the May08 expiration are as follows:
Stock Purchase Cost: $16,879.95
($84.35*200+$9.95 commission)
Net Profit:
(a) Options Income:+$965.65 (200*$2.40+ 200*$.85+ 200*$1.75- 3*$11.45 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation: -$889.90
= ($80.00-$84.35)*200 - 2*$9.95 commissions
Total Net Profit: +$75.75
= ($965.65 +$0 -$889.90)
BA Annualized Return on Investment: +1.9%
(+$75.75/$16,879.95)*(365/87 days)
3. Disney -- Closed
The Transactions History to date is as follows:
02/20/08 Initial Stock Purchase Transaction -- Bought 600 DIS @ $32.09
02/20/08 Initial Calls Sold Transaction -- Sold 6 DIS Mar08 32.5 Calls @ $.80
03/22/08 Mar08 Options Expired
03/24/08 Covered Calls Continuation Transaction -- Sold 6 Apr08 32.5 Calls @ $.65
Note: The price of DIS was $31.85 when the calls were written on 3/24/08.
04/19/08 Apr08 Options Expired
04/21/08 Covered Calls Continuation Transaction -- Sold 6 May08 32.5 Calls @ $.50
Note: The price of DIS was $31.35 when the calls were written on 4/21/08.
05/17/08 Options Exercised -- STC 600 DIS @ $32.50
[Note: DIS stock closed on expiration Friday (5/16/08) at $34.91)]
The overall performance results(including commissions)for the DIS transactions through the May08 expiration are as follows:
Stock Purchase Cost: $19,263.95
($32.09*600+$9.95 commission)
Net Profit:
(a) Options Income: +$1,126.65 (600*$.80 +600*$.65 +600*$.50 - 3*$14.45 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation: +$226.10
= ($32.50-$32.09)*600 - 2*$9.95 commissions
Total Net Profit: +$1,352.75
= ($1,126.65 + $0 +$226.10)
DIS Annualized Return on Investment: +43.4%
(+$1,352.75/$19,263.95)*(365/59 days)
4. iShares MSCI Emerging Markets ETF
04/28/08 Bought 100 EEM @ $145.30
04/28/08 Sold 1 EEM May08 $140 Call @ $7.90
Transactions History:
04/28/08 Initial Stock Purchase Transaction -- Bought 100 EEM @ $145.30
04/22/08 Initial Calls Sold Transaction -- Sold 1 EEM May08 $140 Calls @ $7.90
05/17/08 Options Exercised -- STC 100 EEM @ $140.00
[Note: EEM ETF closed on expiration Friday (5/16/08) at $155.10)]
The overall performance results(including commissions)for the EEM transactions through the May08 expiration were as follows:
Stock Purchase Cost: $14,538.95
($145.30*100+$8.95 commission)
Net Profit:
(a) Options Income: $780.30 (100*$7.90 - $9.70 commissions)
(b) Dividend Income: $0.00
(c) Capital Appreciation: -$547.90
= ($140.00-$145.30)*100 - 2*$8.95 commissions
Total Net Profit: +$230.40
= ($780.30+$0.00-$547.90)
EEM Annualized Return on Investment: +30.4%
(+$230.40/$14,538.95)*(365/19 days)
5. McDermott International -- Closed
Transactions History:
04/28/08 Initial Stock Purchase Transaction -- Bought 300 MDR @ $59.16
04/28/08 Initial Calls Sold Transaction -- Sold 3 MDR May08 60 Calls @ $2.30
05/17/08 Options Exercised -- STC 300 MDR @ $60.00
[Note: MDR stock closed on expiration Friday (5/16/08) at $60.36)]
The overall performance results(including commissions)for the MDR transactions through the May08 expiration were as follows:
Stock Purchase Cost: $17,756.95
($59.16*300+$8.95 commission)
Net Profit:
(a) Options Income: $678.80 (300*$2.30 - $11.20 commissions)
(b) Dividend Income: $0.00
(c) Capital Appreciation: +$234.10
= ($60.00-$59.16)*300 - 2*$8.95 commissions
Total Net Profit: +$912.90
= ($678.80+$0.00+$234.10)
MDR Annualized Return on Investment: +98.8%
(+$912.90/$17,756.95)*(365/19 days)
6. Nokia -- Closed
Transactions History:
04/21/08 Initial Stock Purchase Transaction -- Bought 1000 NOK @ $29.07
04/21/08 Initial Calls Sold Transaction -- Sold 10 NOK May08 29 Calls @ $1.05
05/09/08 Ex-Dividend Date $.7802 * 1000 shares = $780.20 dividend income
05/17/08 Options Exercised -- STC 1000 BK @ $29.00
[Note: NOK stock closed on expiration Friday (5/16/08) at $29.17)]
The overall performance results(including commissions)for the NOK transactions through the May08 expiration were as follows:
Stock Purchase Cost: $29,078.95
($29.07*1000+$8.95 commission)
Net Profit:
(a) Options Income: $1,033.55 (1000*$1.05 - $16.45 commissions)
(b) Dividend Income: $780.20 (1000 * $.7802)
(c) Capital Appreciation: -$87.90
= ($29.00-$29.07)*1000 - 2*$8.95 commissions
Total Net Profit: +$1,725.85
= ($1,033.55+$780.20-$87.90)
NOK Annualized Return on Investment: +83.3%
(+$1,725.85/$29,078.95)*(365/26 days)
Monday, May 12, 2008
Market Meter Changes to Slightly Bearish
The Covered Calls Advisor conducts weekly reviews of the six key metrics used to determine its U.S. Market Meter Indicator. Today the indicator has changed from its prior Neutral rating to a current rating of Slightly Bearish.
The current readings for the six metrics are:
1. U.S. Earnings and Bond Yield Spread:
4.77%-3.77%=+1.00% is Neutral.
2. Rest-of-World Earnings and Bond Yield Spread:
7.502%-3.99%=+3.51% is Very Bullish.
3. Real Earnings Growth:
(+0.5% Erngs Growth - 2.5% Inflation)=-2.0% is Bearish.
4. Current Vs. Expected P/E Ratios:
(18.6-20.98)/20.98 = -3.9% is Slightly Bearish.
5. Investor Sentiment (Price Momentum):
a. Longer-Term (Price Change vs. 9 months ago for Russell 3000):
(80.42-83.67)/83.67=-3.9% is Slightly Bearish.
b. Shorter-Term (using NYSE & NASDAQ Avg. 30-Day Advance/Decline Oscillators):
Slightly Bearish.
The average of the longer-term and the shorter term momentum indicators provides the result for this metric. Thus, since both metrics are 'slightly bearish', the overall Investor Sentiment rating is also now Slightly Bearish.
6. Covered Calls Advisor's Gut Feeling: Slightly Bearish
The composite overall average outlook for the six indicators above is SLIGHTLY BEARISH, which is now reflected on the 'U.S. Market Meter' Indicator at the top of the sidebar column of this blog. The meter also states the recommended covered calls investing strategy for this assessment: "The Covered Calls Advisor says: The Current Overall Stock Market Outlook is: SLIGHTLY BEARISH. The Corresponding Investing Strategy is: SELL SLIGHTLY IN-THE-MONEY COVERED CALLS."
By 'slightly in-the-money', this advisor means that the covered call positions in a portfolio of near-month covered calls should now be established on-average with the stock price between 0.5% and 2.0% above the options strike price.
The six factors combined to result in a Slightly Bearish overall market view at this time. The very bullish reading from the high earnings-to-bond yield spreads in the rest-of-world(i.e. other than U.S.) are offset by the neutral to bearish ratings for each of the five other metrics used to determine the overall Market Meter rating.
The current readings for the six metrics are:
1. U.S. Earnings and Bond Yield Spread:
4.77%-3.77%=+1.00% is Neutral.
2. Rest-of-World Earnings and Bond Yield Spread:
7.502%-3.99%=+3.51% is Very Bullish.
3. Real Earnings Growth:
(+0.5% Erngs Growth - 2.5% Inflation)=-2.0% is Bearish.
4. Current Vs. Expected P/E Ratios:
(18.6-20.98)/20.98 = -3.9% is Slightly Bearish.
5. Investor Sentiment (Price Momentum):
a. Longer-Term (Price Change vs. 9 months ago for Russell 3000):
(80.42-83.67)/83.67=-3.9% is Slightly Bearish.
b. Shorter-Term (using NYSE & NASDAQ Avg. 30-Day Advance/Decline Oscillators):
Slightly Bearish.
The average of the longer-term and the shorter term momentum indicators provides the result for this metric. Thus, since both metrics are 'slightly bearish', the overall Investor Sentiment rating is also now Slightly Bearish.
6. Covered Calls Advisor's Gut Feeling: Slightly Bearish
The composite overall average outlook for the six indicators above is SLIGHTLY BEARISH, which is now reflected on the 'U.S. Market Meter' Indicator at the top of the sidebar column of this blog. The meter also states the recommended covered calls investing strategy for this assessment: "The Covered Calls Advisor says: The Current Overall Stock Market Outlook is: SLIGHTLY BEARISH. The Corresponding Investing Strategy is: SELL SLIGHTLY IN-THE-MONEY COVERED CALLS."
By 'slightly in-the-money', this advisor means that the covered call positions in a portfolio of near-month covered calls should now be established on-average with the stock price between 0.5% and 2.0% above the options strike price.
The six factors combined to result in a Slightly Bearish overall market view at this time. The very bullish reading from the high earnings-to-bond yield spreads in the rest-of-world(i.e. other than U.S.) are offset by the neutral to bearish ratings for each of the five other metrics used to determine the overall Market Meter rating.
Thursday, May 1, 2008
Bought AU Optronics Corp ADR
A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) as follows:
Established AU Optronics Corp ADR(AUO) Covered Calls for May08.
05/01/08 Bought 1000 AUO @ $19.778
05/01/08 Sold 10 AUO May08 $20 Calls @ $.60
Annualized Return If Stock Price Unchanged (ARIU): +69.1%
Annualized Return If Exercised (ARIE): +95.2%
Downside Breakeven Protection: 3.0%
Established AU Optronics Corp ADR(AUO) Covered Calls for May08.
05/01/08 Bought 1000 AUO @ $19.778
05/01/08 Sold 10 AUO May08 $20 Calls @ $.60
Annualized Return If Stock Price Unchanged (ARIU): +69.1%
Annualized Return If Exercised (ARIE): +95.2%
Downside Breakeven Protection: 3.0%
Returns -- Through April 2008
One-month, year-to-date, and prior year performance results of the Covered Calls Advisor Portfolio (CCAP) are presented below. In each instance, CCAP results are compared against the benchmark portfolio which is the Schwab MarketTrack Balanced Portfolio (SWBGX).
1. One-Month Result (Apr 2008):
At market close on 04/30/2008, the total Covered Calls Advisor Portfolio (CCAP) value was $246,499.09, a $4,023.75 increase in the overall portfolio value compared with the $242,475.34 at the end of March(03/31/2008).
CCAP April 2008 Absolute Return = +1.7%
($246,499.09-$242,475.34)/$242,475.34
Benchmark Comparison: April 2008 Absolute Return for SWBGX = +3.1%
($16.24-$15.75)/$15.75
2. 2008 Year-to-Date Results (Jan 1st through Apr 30th, 2008):
CCAP 2008 Year-to-Date Absolute Return = -4.4%
($246,499.09-$257,886.51)/$257,886.51
Benchmark (SWBGX) 2008 Year-to-Date Absolute Return =
-3.3%
($16.24-$16.79)/$16.79
3. Prior Year Results (2007):
The Covered Calls Advisor Portfolio (CCAP) was initiated on September 14th, 2007 with a beginning balance of $250,000. The CCAP balance at year-end (12/31/07) was $257,886.51. Below are the returns of the CCAP for this 2007 timeframe compared with the results of the SWBGX benchmark during the same time period.
CCAP 2007 Absolute Return = +3.2%
($257,886.51-$250,000.00)/$250,000.00
Benchmark (SWBGX) 2007 Absolute Return = +0.7%
($16.79-$16.68)/$16.68
The corresponding annualized return for the 108 days the CCAP existed in 2007 (between Sept 14, 2007 and Dec 31, 2007) was:
CCAP 2007 Annualized Return = +10.7%
[($257,886.51-$250,000.00)/$250,000.00]*(365/108 days)
Benchmark (SWBGX) 2007 Annualized Return = +2.2%
[($16.79-$16.68)/$16.68]*(365/108 days)
This Advisor's Overall Market Meter shows that a NEUTRAL investment posture is appropriate at this time. The corresponding covered calls investing approach is to write near-month primarily at-the-money covered calls.
1. One-Month Result (Apr 2008):
At market close on 04/30/2008, the total Covered Calls Advisor Portfolio (CCAP) value was $246,499.09, a $4,023.75 increase in the overall portfolio value compared with the $242,475.34 at the end of March(03/31/2008).
CCAP April 2008 Absolute Return = +1.7%
($246,499.09-$242,475.34)/$242,475.34
Benchmark Comparison: April 2008 Absolute Return for SWBGX = +3.1%
($16.24-$15.75)/$15.75
2. 2008 Year-to-Date Results (Jan 1st through Apr 30th, 2008):
CCAP 2008 Year-to-Date Absolute Return = -4.4%
($246,499.09-$257,886.51)/$257,886.51
Benchmark (SWBGX) 2008 Year-to-Date Absolute Return =
-3.3%
($16.24-$16.79)/$16.79
3. Prior Year Results (2007):
The Covered Calls Advisor Portfolio (CCAP) was initiated on September 14th, 2007 with a beginning balance of $250,000. The CCAP balance at year-end (12/31/07) was $257,886.51. Below are the returns of the CCAP for this 2007 timeframe compared with the results of the SWBGX benchmark during the same time period.
CCAP 2007 Absolute Return = +3.2%
($257,886.51-$250,000.00)/$250,000.00
Benchmark (SWBGX) 2007 Absolute Return = +0.7%
($16.79-$16.68)/$16.68
The corresponding annualized return for the 108 days the CCAP existed in 2007 (between Sept 14, 2007 and Dec 31, 2007) was:
CCAP 2007 Annualized Return = +10.7%
[($257,886.51-$250,000.00)/$250,000.00]*(365/108 days)
Benchmark (SWBGX) 2007 Annualized Return = +2.2%
[($16.79-$16.68)/$16.68]*(365/108 days)
This Advisor's Overall Market Meter shows that a NEUTRAL investment posture is appropriate at this time. The corresponding covered calls investing approach is to write near-month primarily at-the-money covered calls.
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