The following transaction was made today to establish a covered calls position against the 400 shares owned in PBR:
07/30/08 Covered Calls Transaction -- STO 4 Aug08 $60.00 Calls @ $1.00
The Transactions History to date is as follows:
07/07/08 Initial Stock Purchase Transaction -- Bought 400 PBR @ $65.95
07/07/08 Initial Calls Sold Transaction -- Sold 4 PBR Jul08 $65.00 Calls @ $2.95
07/19/08 July08 Options Expired
07/24/08 Covered Calls Continuation Transaction -- Sold 4 PBR Aug08 $60.00 Calls @ $1.00
Note: Price of PBR was $56.86 at the time when the calls were sold today.
The overall performance results(including commissions) for the PBR transactions through the Aug08 expiration would be as follows:
Stock Purchase Cost: $26,388.95
($65.95*500+$8.95 commission)
Net Profit:
(a) Options Income: +$1,556.10 (400*($2.95+$1.00) - 2*$11.95 commissions)
(b) Dividend Income: +$0
(c) Capital Appreciation (If exercised): -$2,397.90
= ($60.00-$65.95)*400 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $60.00): -$841.80
= (+$1,556.10+$0-$2,397.90)
Annualized Return If Exercised (ARIE) -29.1%
(-$841.80/$26,388.95)*(365/40 days)
Wednesday, July 30, 2008
Friday, July 25, 2008
International Investing
The Covered Calls Advisor Portfolio(CCAP) uses an asset allocation guideline of:
U.S. Large Cap -- 50%
U.S. Small Cap -- 20%
International -- 25%
Bonds -- 0%
Cash(Money Market) -- 5%
Previous posts have described the approach used for identifying potential U.S. stock selections for purchase consideration in CCAP. The table below is the simple value-oriented model used to rank various international countries by overall investment worthiness. At present for international investments, using a country-specific ETF will normally be the preferred investment method. This approach is preferable at the present time in comparison with investing in individual companies because of the relatively modest amount of detailed and reliable financial data and analysis presently available on individual international company ADRs. As time goes on, it is expected that the availability of more and higher quality financial analysis information will be available for a wider range of ADRs. Also, from a practical viewpoint, the number of liquid call options on ADRs is somewhat limited now but is likely to increase substantially during the next couple of years.
As shown on the spreadsheet below, the current three highest ranked international (i.e. non-U.S.) countries as determined by the valuation model are:
1. Taiwan
2. S Korea
3. China
The sources for the data are:
1. For Estimated GDP Growth and Estimated Inflation %:
Economist Link
2. For Current P/E Ratios and Current Price/Book Ratios:
IndexUniverse Link
The ticker symbol ('spy' in this instance) shown at the end of the URL can be modified to obtain the necessary data separately for each country's ETF.
Finally, the percent weightings for each of the three component factors used to determine the overall 'Weighted Rankings' for each country is:
- Earnings Yield minus Est.Inflation Percent = 40%
- GDP Increase Percent minus Inflation Percent = 30%
- GDP Increase Percent divided by the Price/Book Ratio = 30%
Your comments or questions on posts on this blog are always welcome.
Simply click on the 'comments' link below to provide your feedback.
U.S. Large Cap -- 50%
U.S. Small Cap -- 20%
International -- 25%
Bonds -- 0%
Cash(Money Market) -- 5%
Previous posts have described the approach used for identifying potential U.S. stock selections for purchase consideration in CCAP. The table below is the simple value-oriented model used to rank various international countries by overall investment worthiness. At present for international investments, using a country-specific ETF will normally be the preferred investment method. This approach is preferable at the present time in comparison with investing in individual companies because of the relatively modest amount of detailed and reliable financial data and analysis presently available on individual international company ADRs. As time goes on, it is expected that the availability of more and higher quality financial analysis information will be available for a wider range of ADRs. Also, from a practical viewpoint, the number of liquid call options on ADRs is somewhat limited now but is likely to increase substantially during the next couple of years.
As shown on the spreadsheet below, the current three highest ranked international (i.e. non-U.S.) countries as determined by the valuation model are:
1. Taiwan
2. S Korea
3. China
The sources for the data are:
1. For Estimated GDP Growth and Estimated Inflation %:
Economist Link
2. For Current P/E Ratios and Current Price/Book Ratios:
IndexUniverse Link
The ticker symbol ('spy' in this instance) shown at the end of the URL can be modified to obtain the necessary data separately for each country's ETF.
Finally, the percent weightings for each of the three component factors used to determine the overall 'Weighted Rankings' for each country is:
- Earnings Yield minus Est.Inflation Percent = 40%
- GDP Increase Percent minus Inflation Percent = 30%
- GDP Increase Percent divided by the Price/Book Ratio = 30%
Your comments or questions on posts on this blog are always welcome.
Simply click on the 'comments' link below to provide your feedback.
Thursday, July 24, 2008
Continuation Transaction -- Honeywell Inc.
The following transaction was made today to establish a covered calls position against the 500 shares of HON:
07/24/08 Covered Calls Transaction -- STO 5 Aug08 $52.50 Calls @ $1.38
The Transactions History to date is as follows:
05/23/08 Initial Stock Purchase Transaction -- Bought 500 HON @ $58.89
05/23/08 Initial Calls Sold Transaction -- Sold 5 HON Jun08 $60 Calls @ $1.20
06/20/08 Jun08 Options Expired
07/02/08 Covered Calls Continuation Transaction -- Sold 5 Jul08 $52.50 Calls @ $.85
Note: Price of HON was $50.12 when the calls were sold today.
07/19/08 July08 Options Expired
07/24/08 Covered Calls Continuation Transaction -- Sold 5 HON Aug08 $52.50 Calls @ $1.38
Note: Price of HON was $52.02 when the calls were sold today.
The overall performance results(including commissions) for the HON transactions through the Aug08 expiration would be as follows:
Stock Purchase Cost: $29,453.95
($58.89*500+$8.95 commission)
Net Profit:
(a) Options Income: +$1,676.90 (500*($1.20+$.85+$1.38) - 3*$12.70 commissions)
(b) Dividend Income: +$137.50 ($.275 per share*500 shares ex-div on 8/15/08)
(c) Capital Appreciation (If exercised): -$3,177.10
= ($52.50-$58.89)*500 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $52.50): -$1,362.70
= (+$1,676.90 +$137.50-$3,177.10)
Annualized Return If Exercised (ARIE) -19.9%
(-$1,362.70/$29,453.95)*(365/85 days)
07/24/08 Covered Calls Transaction -- STO 5 Aug08 $52.50 Calls @ $1.38
The Transactions History to date is as follows:
05/23/08 Initial Stock Purchase Transaction -- Bought 500 HON @ $58.89
05/23/08 Initial Calls Sold Transaction -- Sold 5 HON Jun08 $60 Calls @ $1.20
06/20/08 Jun08 Options Expired
07/02/08 Covered Calls Continuation Transaction -- Sold 5 Jul08 $52.50 Calls @ $.85
Note: Price of HON was $50.12 when the calls were sold today.
07/19/08 July08 Options Expired
07/24/08 Covered Calls Continuation Transaction -- Sold 5 HON Aug08 $52.50 Calls @ $1.38
Note: Price of HON was $52.02 when the calls were sold today.
The overall performance results(including commissions) for the HON transactions through the Aug08 expiration would be as follows:
Stock Purchase Cost: $29,453.95
($58.89*500+$8.95 commission)
Net Profit:
(a) Options Income: +$1,676.90 (500*($1.20+$.85+$1.38) - 3*$12.70 commissions)
(b) Dividend Income: +$137.50 ($.275 per share*500 shares ex-div on 8/15/08)
(c) Capital Appreciation (If exercised): -$3,177.10
= ($52.50-$58.89)*500 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $52.50): -$1,362.70
= (+$1,676.90 +$137.50-$3,177.10)
Annualized Return If Exercised (ARIE) -19.9%
(-$1,362.70/$29,453.95)*(365/85 days)
Established Devon Energy Covered Calls
A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) as follows:
Established Devon Energy(DVN) Covered Calls for Aug08.
07/24/08 Bought 200 DVN @ $94.45
07/24/08 Sold 2 DVN Aug08 $105.00 Calls @ $2.30
Annualized Return If Stock Price Unchanged (ARIU): +34.2%
Annualized Return If Exercised (ARIE): +191.0%
Downside Breakeven Protection: 2.4%
As you know, normally I do not establish deep-out-of-the-money covered call positions. In this case however, I believe the recent short-term sell off in Devon shares has been greatly overdone. I'm expecting a sharp bounce back in the stock price, especially in conjunction with the likely strong quarterly earnings announcement forthcoming on August 6th.
Established Devon Energy(DVN) Covered Calls for Aug08.
07/24/08 Bought 200 DVN @ $94.45
07/24/08 Sold 2 DVN Aug08 $105.00 Calls @ $2.30
Annualized Return If Stock Price Unchanged (ARIU): +34.2%
Annualized Return If Exercised (ARIE): +191.0%
Downside Breakeven Protection: 2.4%
As you know, normally I do not establish deep-out-of-the-money covered call positions. In this case however, I believe the recent short-term sell off in Devon shares has been greatly overdone. I'm expecting a sharp bounce back in the stock price, especially in conjunction with the likely strong quarterly earnings announcement forthcoming on August 6th.
Wednesday, July 23, 2008
Continuation Transactions -- Accenture, EMCOR Group, Hewlett-Packard, Humana, Microsoft, and Travelers
Today, covered calls positions were established against six companies already owned in the Covered Calls Advisor Portfolio(CCAP). As shown by the transactions history below, the Jul08 options expired worthless and new options were sold today to establish Aug08 covered call positions in each instance.
1. Accenture (ACN) Continuation Transaction
05/23/08 Initial Stock Purchase Transaction -- Bought 500 ACN @ $36.70
05/27/08 Initial Calls Sold Transaction -- Sold 5 ACN Jul08 $40 Calls @ $.80
07/19/08 July08 Options Expired
07/23/08 Covered Calls Continuation Transaction -- Sold 5 ACN Aug08 $40 Calls @ $1.40
The overall performance results(including commissions)for the ACN transactions through the Aug08 expiration would be as follows:
Stock Purchase Cost: $18,358.95
($36.70*500+$8.95 commission)
Net Profit:
(a) Options Income: +$1,074.60 (500*($.80+$1.40) - 2*$12.70 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation(If exercised): +$1,632.10
= ($40.00-$36.70)*500 - 2*$8.95 commissions
Total Net Profit(If stock price exercised): +$2,706.70
= (+$1,074.60+$0+$1,632.10)
Annualized Return If Exercised (ARIE) +63.3%
(+$2,706.70/$18,358.95)*(365/85 days)
2. EMCOR Holdings (EME) Continuation Transaction
07/02/08 Initial Stock Purchase Transaction -- Bought 500 EME @ $26.64
07/02/08 Initial Calls Sold Transaction -- Sold 5 EME Jul08 $27.50 Calls @ $.70
07/19/08 July08 Options Expired
07/23/08 Covered Calls Continuation Transaction -- Sold 5 EME Aug08 $27.50 Calls @ $1.25
The overall performance results(including commissions)for the EME transactions through the Aug08 expiration would be as follows:
Stock Purchase Cost: $13,328.95
($26.64*500+$8.95 commission)
Net Profit:
(a) Options Income: +$949.60 (500*($.70+$1.25) - 2*$12.70 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation(If exercised): +$412.10
= ($27.50-$26.64)*500 - 2*$8.95 commissions
Total Net Profit(If stock price exercised): +$1,361.70
= (+$949.60+$0+$412.10)
Annualized Return If Exercised (ARIE) +82.9%
(+$1,361.70/$13,328.95)*(365/45 days)
3. Hewlett-Packard (HPQ) Continuation Transaction
07/08/08 Initial Stock Purchase Transaction -- Bought 400 HPQ @ $43.74
07/08/08 Initial Calls Sold Transaction -- Sold 4 HPQ Jul08 $45.00 Calls @ $.50
07/19/08 July08 Options Expired
07/23/08 Covered Calls Continuation Transaction -- Sold 4 HPQ Aug08 $45.00 Calls
@ $.85
The overall performance results(including commissions)for the HPQ transactions through the Aug08 expiration would be as follows:
Stock Purchase Cost: $21,878.95
($43.74*400+$8.95 commission)
Net Profit:
(a) Options Income: +$649.60 (500*($.50+$.85) - 2*$12.70 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation(If exercised): +$486.10
= ($45.00-$43.74)*400 - 2*$8.95 commissions
Total Net Profit(If stock price exercised): +$1,135.70
= (+$649.60+$0+$486.10)
Annualized Return If Exercised (ARIE) +48.6%
(+$1,135.70/$21,878.95)*(365/39 days)
4. Humana (HUM) Continuation Transaction
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.
06/21/08 Jun08 Options Expired
06/25/08 Covered Calls Continuation Transaction -- STO 2 Jul08 $45 Calls @ $.65
Note: Price of HUM was $41.95 when the calls were sold today.
07/19/08 July08 Options Expired
07/23/08 Covered Calls Continuation Transaction -- Sold 2 HUM Aug08 $45.00 Calls
@ $1.30
The overall performance results(including commissions)for the HUM transactions through the Aug08 expiration would be as follows:
Stock Purchase Cost: $13,739.95
($68.65*200+$9.95 commission)
Net Profit:
(a) Options Income: +$1,937.30 (200*($2.20+$1.25+$2.10+2.50+$.65+1.30 - 6*$10.45 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation(If exercised): -$4,667.90
= ($45.00-$68.65)*200 - 2*$8.95 commissions
Total Net Profit(If stock price exercised): -$2,730.60
= (+$1,937.30+$0-$4,667.90)
Annualized Return If Exercised (ARIE) -40.8%
(-$2,730.60/$13,739.95)*(365/178 days)
5. Microsoft (MSFT) Continuation Transaction
04/22/08 Initial Stock Purchase Transaction -- Bought 1000 MSFT @ $30.02
04/22/08 Initial Calls Sold Transaction -- Sold 10 MSFT May08 $31 Calls @ $.82
05/13/08 Ex-Dividend Date -- $.110 per share
05/17/08 May08 Options Expired
06/25/08 Covered Calls Continuation Transaction -- STO 10 Jul08 29 Calls @ $.60
07/19/08 July08 Options Expired
07/23/08 Covered Calls Continuation Transaction -- Sold 10 MSFT Aug08 $27.00 Calls
@ $.49
The overall performance results(including commissions)for the MSFT transactions through the Aug08 expiration would be as follows:
Stock Purchase Cost: $30,028.95
($30.02*1000+$8.95 commission)
Net Profit:
(a) Options Income: +$1,860.65 (1000*($.82+$.60+$.49 - 3*$16.45 commissions)
(b) Dividend Income: $110 (1000 shares * $.110)
(c) Capital Appreciation(If exercised): -$3,037.90
= ($27.00-$30.02)*1000 - 2*$8.95 commissions
Total Net Profit(If stock price exercised): -$1,287.25
= (+$1,860.65+$110.00-$3,037.90)
Annualized Return If Exercised (ARIE) -13.5%
(-$1,287.25/$30,028.95)*(365/116 days)
6. Travelers Companies (TRV) Continuation Transaction
05/22/08 Initial Stock Purchase Transaction -- Bought 500 TRV @ $49.28
06/05/08 Initial Calls Sold Transaction -- Sold 5 TRV Jun08 $50 Calls @ $.85
06/06/08 Ex-Dividend Payment of $150.00 ($.30 per share x 500 shares)
06/20/08 Jun08 Options Expired
07/10/08 Covered Calls Continuation Transaction -- Sold 5 Jul08 $45.00 Calls @ $.80
Note: Price of TRV was $44.50 when the calls were sold today.
07/19/08 July08 Options Expired
07/23/08 Covered Calls Continuation Transaction -- Sold 5 TRV Aug08 $45.00 Calls
@ $1.85
The overall performance results(including commissions)for the TRV transactions through the Aug08 expiration would be as follows:
Stock Purchase Cost: $24,648.95
($49.28*500+$8.95 commission)
Net Profit:
(a) Options Income: +$1,711.90 (500*($.85+$.80+$1.85) - 3*$12.70 commissions)
(b) Dividend Income: +$150.00
(c) Capital Appreciation (If exercised): -$2,157.90
= ($45.00-$49.28)*500 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $45.00): -$296.00
= (+$1,711.90 +$150.00 -$2,157.90)
Annualized Return If Exercised (ARIE) -5.1%
(-$296.00/$24,648.95)*(365/86 days)
1. Accenture (ACN) Continuation Transaction
05/23/08 Initial Stock Purchase Transaction -- Bought 500 ACN @ $36.70
05/27/08 Initial Calls Sold Transaction -- Sold 5 ACN Jul08 $40 Calls @ $.80
07/19/08 July08 Options Expired
07/23/08 Covered Calls Continuation Transaction -- Sold 5 ACN Aug08 $40 Calls @ $1.40
The overall performance results(including commissions)for the ACN transactions through the Aug08 expiration would be as follows:
Stock Purchase Cost: $18,358.95
($36.70*500+$8.95 commission)
Net Profit:
(a) Options Income: +$1,074.60 (500*($.80+$1.40) - 2*$12.70 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation(If exercised): +$1,632.10
= ($40.00-$36.70)*500 - 2*$8.95 commissions
Total Net Profit(If stock price exercised): +$2,706.70
= (+$1,074.60+$0+$1,632.10)
Annualized Return If Exercised (ARIE) +63.3%
(+$2,706.70/$18,358.95)*(365/85 days)
2. EMCOR Holdings (EME) Continuation Transaction
07/02/08 Initial Stock Purchase Transaction -- Bought 500 EME @ $26.64
07/02/08 Initial Calls Sold Transaction -- Sold 5 EME Jul08 $27.50 Calls @ $.70
07/19/08 July08 Options Expired
07/23/08 Covered Calls Continuation Transaction -- Sold 5 EME Aug08 $27.50 Calls @ $1.25
The overall performance results(including commissions)for the EME transactions through the Aug08 expiration would be as follows:
Stock Purchase Cost: $13,328.95
($26.64*500+$8.95 commission)
Net Profit:
(a) Options Income: +$949.60 (500*($.70+$1.25) - 2*$12.70 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation(If exercised): +$412.10
= ($27.50-$26.64)*500 - 2*$8.95 commissions
Total Net Profit(If stock price exercised): +$1,361.70
= (+$949.60+$0+$412.10)
Annualized Return If Exercised (ARIE) +82.9%
(+$1,361.70/$13,328.95)*(365/45 days)
3. Hewlett-Packard (HPQ) Continuation Transaction
07/08/08 Initial Stock Purchase Transaction -- Bought 400 HPQ @ $43.74
07/08/08 Initial Calls Sold Transaction -- Sold 4 HPQ Jul08 $45.00 Calls @ $.50
07/19/08 July08 Options Expired
07/23/08 Covered Calls Continuation Transaction -- Sold 4 HPQ Aug08 $45.00 Calls
@ $.85
The overall performance results(including commissions)for the HPQ transactions through the Aug08 expiration would be as follows:
Stock Purchase Cost: $21,878.95
($43.74*400+$8.95 commission)
Net Profit:
(a) Options Income: +$649.60 (500*($.50+$.85) - 2*$12.70 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation(If exercised): +$486.10
= ($45.00-$43.74)*400 - 2*$8.95 commissions
Total Net Profit(If stock price exercised): +$1,135.70
= (+$649.60+$0+$486.10)
Annualized Return If Exercised (ARIE) +48.6%
(+$1,135.70/$21,878.95)*(365/39 days)
4. Humana (HUM) Continuation Transaction
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.
06/21/08 Jun08 Options Expired
06/25/08 Covered Calls Continuation Transaction -- STO 2 Jul08 $45 Calls @ $.65
Note: Price of HUM was $41.95 when the calls were sold today.
07/19/08 July08 Options Expired
07/23/08 Covered Calls Continuation Transaction -- Sold 2 HUM Aug08 $45.00 Calls
@ $1.30
The overall performance results(including commissions)for the HUM transactions through the Aug08 expiration would be as follows:
Stock Purchase Cost: $13,739.95
($68.65*200+$9.95 commission)
Net Profit:
(a) Options Income: +$1,937.30 (200*($2.20+$1.25+$2.10+2.50+$.65+1.30 - 6*$10.45 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation(If exercised): -$4,667.90
= ($45.00-$68.65)*200 - 2*$8.95 commissions
Total Net Profit(If stock price exercised): -$2,730.60
= (+$1,937.30+$0-$4,667.90)
Annualized Return If Exercised (ARIE) -40.8%
(-$2,730.60/$13,739.95)*(365/178 days)
5. Microsoft (MSFT) Continuation Transaction
04/22/08 Initial Stock Purchase Transaction -- Bought 1000 MSFT @ $30.02
04/22/08 Initial Calls Sold Transaction -- Sold 10 MSFT May08 $31 Calls @ $.82
05/13/08 Ex-Dividend Date -- $.110 per share
05/17/08 May08 Options Expired
06/25/08 Covered Calls Continuation Transaction -- STO 10 Jul08 29 Calls @ $.60
07/19/08 July08 Options Expired
07/23/08 Covered Calls Continuation Transaction -- Sold 10 MSFT Aug08 $27.00 Calls
@ $.49
The overall performance results(including commissions)for the MSFT transactions through the Aug08 expiration would be as follows:
Stock Purchase Cost: $30,028.95
($30.02*1000+$8.95 commission)
Net Profit:
(a) Options Income: +$1,860.65 (1000*($.82+$.60+$.49 - 3*$16.45 commissions)
(b) Dividend Income: $110 (1000 shares * $.110)
(c) Capital Appreciation(If exercised): -$3,037.90
= ($27.00-$30.02)*1000 - 2*$8.95 commissions
Total Net Profit(If stock price exercised): -$1,287.25
= (+$1,860.65+$110.00-$3,037.90)
Annualized Return If Exercised (ARIE) -13.5%
(-$1,287.25/$30,028.95)*(365/116 days)
6. Travelers Companies (TRV) Continuation Transaction
05/22/08 Initial Stock Purchase Transaction -- Bought 500 TRV @ $49.28
06/05/08 Initial Calls Sold Transaction -- Sold 5 TRV Jun08 $50 Calls @ $.85
06/06/08 Ex-Dividend Payment of $150.00 ($.30 per share x 500 shares)
06/20/08 Jun08 Options Expired
07/10/08 Covered Calls Continuation Transaction -- Sold 5 Jul08 $45.00 Calls @ $.80
Note: Price of TRV was $44.50 when the calls were sold today.
07/19/08 July08 Options Expired
07/23/08 Covered Calls Continuation Transaction -- Sold 5 TRV Aug08 $45.00 Calls
@ $1.85
The overall performance results(including commissions)for the TRV transactions through the Aug08 expiration would be as follows:
Stock Purchase Cost: $24,648.95
($49.28*500+$8.95 commission)
Net Profit:
(a) Options Income: +$1,711.90 (500*($.85+$.80+$1.85) - 3*$12.70 commissions)
(b) Dividend Income: +$150.00
(c) Capital Appreciation (If exercised): -$2,157.90
= ($45.00-$49.28)*500 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $45.00): -$296.00
= (+$1,711.90 +$150.00 -$2,157.90)
Annualized Return If Exercised (ARIE) -5.1%
(-$296.00/$24,648.95)*(365/86 days)
Dover Corporation -- Closed
The position in Dover Corporation(DOV)was closed today by selling the 500 shares owned.
The Transactions History to date was as follows:
05/23/08 Initial Stock Purchase Transaction -- Bought 500 DOV @ $52.13
05/23/08 Initial Calls Sold Transaction -- Sold 5 DOV Jul08 $55 Calls @ $1.00
06/21/08 Jun08 Options Expired -- Note: DOV closing price was $51.06
06/23/08 Covered Calls Continuation Transaction -- Sold 5 Jul08 $50 Calls @ $1.85
07/19/08 Jul08 Options Expired -- Note: DOV closing price was $49.05
07/23/08 Sold 500 DOV at $50.56
The overall performance results(including commissions)for the DOV transactions were as follows:
Stock Purchase Cost: $26,073.95
($52.13*500+$8.95 commission)
Net Profit:
(a) Options Income: +$1,450.40 (500*$1.00 + 500*$1.85 - 2*$12.70 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation: -$802.90
= ($50.56-$52.13)*500 - 2*$8.95 commissions
Total Net Profit: +$647.50
= (+$1,450.40 + $0 - $802.90)
Annualized Return: +14.9%
(+$647.50/$26,073.95)*(365/61 days)
The Transactions History to date was as follows:
05/23/08 Initial Stock Purchase Transaction -- Bought 500 DOV @ $52.13
05/23/08 Initial Calls Sold Transaction -- Sold 5 DOV Jul08 $55 Calls @ $1.00
06/21/08 Jun08 Options Expired -- Note: DOV closing price was $51.06
06/23/08 Covered Calls Continuation Transaction -- Sold 5 Jul08 $50 Calls @ $1.85
07/19/08 Jul08 Options Expired -- Note: DOV closing price was $49.05
07/23/08 Sold 500 DOV at $50.56
The overall performance results(including commissions)for the DOV transactions were as follows:
Stock Purchase Cost: $26,073.95
($52.13*500+$8.95 commission)
Net Profit:
(a) Options Income: +$1,450.40 (500*$1.00 + 500*$1.85 - 2*$12.70 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation: -$802.90
= ($50.56-$52.13)*500 - 2*$8.95 commissions
Total Net Profit: +$647.50
= (+$1,450.40 + $0 - $802.90)
Annualized Return: +14.9%
(+$647.50/$26,073.95)*(365/61 days)
Established JP Morgan Chase Covered Calls
A new covered calls position was established Tuesday in the Covered Calls Advisor Portfolio(CCAP) as follows:
Established JP Morgan Chase(JPM) Covered Calls for Aug08.
07/22/08 Bought 800 JPM @ $37.91
07/22/08 Sold 8 JPM Aug08 $37.50 Calls @ $2.31
Annualized Return If Exercised (ARIE): +73.1%
Downside Breakeven Protection: 6.1%
Established JP Morgan Chase(JPM) Covered Calls for Aug08.
07/22/08 Bought 800 JPM @ $37.91
07/22/08 Sold 8 JPM Aug08 $37.50 Calls @ $2.31
Annualized Return If Exercised (ARIE): +73.1%
Downside Breakeven Protection: 6.1%
Established Cisco Systems Covered Calls
A new covered calls position was established Tuesday in the Covered Calls Advisor Portfolio(CCAP) as follows:
Established Cisco Systems Inc(CSCO) Covered Calls for Aug08.
07/22/08 Bought 700 CSCO @ $21.66
07/22/08 Sold 7 CSCO Aug08 $22 Calls @ $.68
Annualized Return If Stock Price Unchanged (ARIU): +45.8%
Annualized Return If Exercised (ARIE): +68.8%
Downside Breakeven Protection: 3.1%
Established Cisco Systems Inc(CSCO) Covered Calls for Aug08.
07/22/08 Bought 700 CSCO @ $21.66
07/22/08 Sold 7 CSCO Aug08 $22 Calls @ $.68
Annualized Return If Stock Price Unchanged (ARIU): +45.8%
Annualized Return If Exercised (ARIE): +68.8%
Downside Breakeven Protection: 3.1%
Tuesday, July 22, 2008
Positions Closed -- AU Optronics, Cooper Tire, Frontier Oil, and Regions Financial
Today, positions were closed by selling the stock of AU Optronics(AUO), Cooper Tire(CTB), Frontier Oil(FTO) and Regions Financial(RF). As shown in the details below, there were substantial losses in each of these investments. The reason for selling out of these holdings is that there has been what I like to refer to as a 'fundamental breakdown' in these four companies resulting directly from a deterioration in the earnings results compared with the expected earnings when these stocks were purchased. A single earnings report below expectations is sufficient grounds to sell the stock from the Covered Calls Advisor's portfolio.
1. AU Optronics(AUO) -- Closed
Transactions History:
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 May expiration Friday.
05/22/08 Covered Calls Continuation Transaction -- Sold 10 Jun08 20 Calls @ $.40
06/21/08 Jun08 Options Expired. Note: AUO closed at $16.70 on June expiration Friday.
06/23/08 Covered Calls Continuation Transaction -- Sold 10 Jul08 17.5 Calls @ $.40
07/19/08 Jul08 Options Expired. Note: AUO closed at $13.09 on July expiration Friday.
07/22/08 Sold 1000 AUO @ $13.12
The overall performance results(including commissions)for the AUO transactions were as follows:
Stock Purchase Cost: $19,786.95
($19.778*1000+$8.95 commission)
Net Profit:
(a) Options Income: $1,350.65 (1000*($.60+$.40+$.40 - 3*$16.45 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation: -$6,640.10
= ($13.12-$19.778)*1000 - 2*$8.95 commissions
Total Net Profit: -$5,289.45
= (+$1,350.65+$0-$6,640.10)
Absolute Return: -26.7%
(-$5,289.45/$19,786.95)
2. Cooper Tire(CTB) -- Closed
Transactions History:
04/28/08 Bought 1000 CTB @ $14.71
04/28/08 Sold 10 CTB May08 $15 Calls @ $.70
05/17/08 May08 Options Expired. Note: CTB closed at $12.59 on May expiration Friday.
05/21/08 Covered Calls Continuation Transaction -- Sold 10 Jun08 12.50 Calls @ $.85
06/21/08 Jun08 Options Expired. Note: CTB closed at $8.49 on June expiration Friday.
06/23/08 Covered Calls Continuation Transaction -- Sold 10 Jul08 10 Calls @ $.35
07/19/08 Jul08 Options Expired. Note: CTB closed at $8.96 on July expiration Friday.
07/22/08 Sold 1000 AUO @ $9.56
The overall performance results(including commissions)for the CTB transactions were as follows:
Stock Purchase Cost: $14,718.95
($14.71*1000+$8.95 commission)
Net Profit:
(a) Options Income: +$1,850.65 (1000*($.70+$.85+$.35 - 3*$16.45 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation: -$5,167.90
= ($9.56-$14.71)*1000 - 2*$8.95 commissions
Total Net Profit: -$3,317.25
= (+$1,850.65+$0-$5,167.90)
Absolute Return: -22.5%
(-$3,317.25/$14,718.95)
3. Frontier Oil(FTO) -- Closed
Transactions History:
02/20/08 Initial Stock Purchase Transaction -- Bought 500 FTO @ $37.60
02/20/08 Initial Calls Sold Transaction -- Sold 5 FTO Mar08 40 Calls @ $1.35
03/22/08 Mar08 Options Expired. Note: FTO closed at $27.94 on Mar expiration Friday.
03/24/08 Covered Calls Continuation Transaction -- Sold 5 Apr08 30 Calls @ $1.45
04/19/08 Apr08 Options Expired. Note: FTO closed at $26.67 on Apr expiration Friday.
06/02/08 Covered Calls Continuation Transaction -- Sold 5 Jun08 35 Calls @ $.60
06/21/08 Jun08 Options Expired. Note: FTO closed at $24.93 on June expiration Friday.
06/23/08 Covered Calls Continuation Transaction -- Sold 10 Jul08 25 Calls @ $1.65
07/19/08 Jul08 Options Expired. Note: FTO closed at $18.27 on July expiration Friday.
07/22/08 Sold 1000 AUO @ $19.58
The overall performance results(including commissions)for the CTB transactions were as follows:
Stock Purchase Cost: $18,808.95
($37.60*500+$8.95 commission)
Net Profit:
(a) Options Income: +$2,474.20 (500*($1.35+$1.45+$.60+$1.65 - 4*$12.70 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation: -$9,027.90
= ($19.58-$37.60)*500 - 2*$8.95 commissions
Total Net Profit: -$6,553.70
= (+$2,474.20+$0-$9,027.90)
Absolute Return: -34.8%
(-$6,553.70/$18,808.95)
4. Regions Financial(RF) -- Closed
Transaction History:
06/03/08 Initial Stock Purchase Transaction -- Bought 1000 RF @ $16.77
06/03/08 Initial Calls Sold Transaction -- Sold 10 RF Jul08 17.50 Calls @ $.75
06/13/08 Ex-Dividend ($.38 per share)
06/21/08 Jun08 Options Expired. Note: RF closed at $11.22 on June expiration Friday.
06/23/08 Covered Calls Continuation Transaction -- Sold 10 Jul08 12.50 Calls @ $.35
07/19/08 Jul08 Options Expired. Note: RF closed at $10.11 on July expiration Friday.
07/22/08 Sold 1000 RF @ $10.65
The overall performance results(including commissions)for the AUO transactions were as follows:
Stock Purchase Cost: $16,778.95
($16.77*1000+$8.95 commission)
Net Profit:
(a) Options Income: $1,067.10 (1000*($.75+$.35 - 2*$16.45 commissions)
(b) Dividend Income: $380.00 ($.38*1000 shares)
(c) Capital Appreciation: -$6,640.10
= ($10.65-$16.77)*1000 - 2*$8.95 commissions
Total Net Profit: -$5,193.00
= (+$1,067.10+$380.00-$6,640.10)
Absolute Return: -30.9%
(-$5,193.00/$16,778.95)
1. AU Optronics(AUO) -- Closed
Transactions History:
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 May expiration Friday.
05/22/08 Covered Calls Continuation Transaction -- Sold 10 Jun08 20 Calls @ $.40
06/21/08 Jun08 Options Expired. Note: AUO closed at $16.70 on June expiration Friday.
06/23/08 Covered Calls Continuation Transaction -- Sold 10 Jul08 17.5 Calls @ $.40
07/19/08 Jul08 Options Expired. Note: AUO closed at $13.09 on July expiration Friday.
07/22/08 Sold 1000 AUO @ $13.12
The overall performance results(including commissions)for the AUO transactions were as follows:
Stock Purchase Cost: $19,786.95
($19.778*1000+$8.95 commission)
Net Profit:
(a) Options Income: $1,350.65 (1000*($.60+$.40+$.40 - 3*$16.45 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation: -$6,640.10
= ($13.12-$19.778)*1000 - 2*$8.95 commissions
Total Net Profit: -$5,289.45
= (+$1,350.65+$0-$6,640.10)
Absolute Return: -26.7%
(-$5,289.45/$19,786.95)
2. Cooper Tire(CTB) -- Closed
Transactions History:
04/28/08 Bought 1000 CTB @ $14.71
04/28/08 Sold 10 CTB May08 $15 Calls @ $.70
05/17/08 May08 Options Expired. Note: CTB closed at $12.59 on May expiration Friday.
05/21/08 Covered Calls Continuation Transaction -- Sold 10 Jun08 12.50 Calls @ $.85
06/21/08 Jun08 Options Expired. Note: CTB closed at $8.49 on June expiration Friday.
06/23/08 Covered Calls Continuation Transaction -- Sold 10 Jul08 10 Calls @ $.35
07/19/08 Jul08 Options Expired. Note: CTB closed at $8.96 on July expiration Friday.
07/22/08 Sold 1000 AUO @ $9.56
The overall performance results(including commissions)for the CTB transactions were as follows:
Stock Purchase Cost: $14,718.95
($14.71*1000+$8.95 commission)
Net Profit:
(a) Options Income: +$1,850.65 (1000*($.70+$.85+$.35 - 3*$16.45 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation: -$5,167.90
= ($9.56-$14.71)*1000 - 2*$8.95 commissions
Total Net Profit: -$3,317.25
= (+$1,850.65+$0-$5,167.90)
Absolute Return: -22.5%
(-$3,317.25/$14,718.95)
3. Frontier Oil(FTO) -- Closed
Transactions History:
02/20/08 Initial Stock Purchase Transaction -- Bought 500 FTO @ $37.60
02/20/08 Initial Calls Sold Transaction -- Sold 5 FTO Mar08 40 Calls @ $1.35
03/22/08 Mar08 Options Expired. Note: FTO closed at $27.94 on Mar expiration Friday.
03/24/08 Covered Calls Continuation Transaction -- Sold 5 Apr08 30 Calls @ $1.45
04/19/08 Apr08 Options Expired. Note: FTO closed at $26.67 on Apr expiration Friday.
06/02/08 Covered Calls Continuation Transaction -- Sold 5 Jun08 35 Calls @ $.60
06/21/08 Jun08 Options Expired. Note: FTO closed at $24.93 on June expiration Friday.
06/23/08 Covered Calls Continuation Transaction -- Sold 10 Jul08 25 Calls @ $1.65
07/19/08 Jul08 Options Expired. Note: FTO closed at $18.27 on July expiration Friday.
07/22/08 Sold 1000 AUO @ $19.58
The overall performance results(including commissions)for the CTB transactions were as follows:
Stock Purchase Cost: $18,808.95
($37.60*500+$8.95 commission)
Net Profit:
(a) Options Income: +$2,474.20 (500*($1.35+$1.45+$.60+$1.65 - 4*$12.70 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation: -$9,027.90
= ($19.58-$37.60)*500 - 2*$8.95 commissions
Total Net Profit: -$6,553.70
= (+$2,474.20+$0-$9,027.90)
Absolute Return: -34.8%
(-$6,553.70/$18,808.95)
4. Regions Financial(RF) -- Closed
Transaction History:
06/03/08 Initial Stock Purchase Transaction -- Bought 1000 RF @ $16.77
06/03/08 Initial Calls Sold Transaction -- Sold 10 RF Jul08 17.50 Calls @ $.75
06/13/08 Ex-Dividend ($.38 per share)
06/21/08 Jun08 Options Expired. Note: RF closed at $11.22 on June expiration Friday.
06/23/08 Covered Calls Continuation Transaction -- Sold 10 Jul08 12.50 Calls @ $.35
07/19/08 Jul08 Options Expired. Note: RF closed at $10.11 on July expiration Friday.
07/22/08 Sold 1000 RF @ $10.65
The overall performance results(including commissions)for the AUO transactions were as follows:
Stock Purchase Cost: $16,778.95
($16.77*1000+$8.95 commission)
Net Profit:
(a) Options Income: $1,067.10 (1000*($.75+$.35 - 2*$16.45 commissions)
(b) Dividend Income: $380.00 ($.38*1000 shares)
(c) Capital Appreciation: -$6,640.10
= ($10.65-$16.77)*1000 - 2*$8.95 commissions
Total Net Profit: -$5,193.00
= (+$1,067.10+$380.00-$6,640.10)
Absolute Return: -30.9%
(-$5,193.00/$16,778.95)
Sunday, July 20, 2008
Market Meter Changes from Slightly Bearish to Neutral
The Covered Calls Advisor conducts semi-monthly reviews of the six key metrics used to determine its U.S. Market Meter Indicator. Today the indicator has changed from its prior Slightly Bearish rating to a current rating of Neutral.
The current readings for each of the six metrics are:
1. U.S. Earnings and Bond Yield Spread:
5.92%-4.08%=+1.84% is Slightly Bullish.
2. Rest-of-World Earnings and Bond Yield Spread:
7.692%-4.07%=+3.62% is Very Bullish.
3. Real Earnings Growth:
(+0.5% Erngs Growth - 3.0% Inflation)=-2.5% is Bearish.
4. Current Vs. Expected P/E Ratios:
(18.6-16.9)/16.9 = +10.1% is Slightly Bullish.
5. Investor Sentiment (Price Momentum):
a. Longer-Term (Price Change vs. 9 months ago for Russell 3000):
(73.33-86.64)/86.64=-15.4% is Very Bearish.
b. Shorter-Term (using NYSE & NASDAQ Avg. 30-Day Advance/Decline Oscillators): Neutral.
The average of the longer-term and the shorter term momentum indicators provides the result for this metric. Thus, since one metric is 'very bearish' while the other is 'neutral', the overall Investor Sentiment rating is now Slightly Bearish.
6. Covered Calls Advisor's Gut Feeling: Neutral
The composite overall average outlook for the six indicators above is NEUTRAL, 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 that corresponds with this assessment: "The Covered Calls Advisor says: The Current Overall Stock Market Outlook is: NEUTRAL. The Corresponding Investing Strategy is: "SELL AT-THE-MONEY COVERED CALLS."
By 'at-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 1.0% below and 1.0% above the options strike price.
The current readings for each of the six metrics are:
1. U.S. Earnings and Bond Yield Spread:
5.92%-4.08%=+1.84% is Slightly Bullish.
2. Rest-of-World Earnings and Bond Yield Spread:
7.692%-4.07%=+3.62% is Very Bullish.
3. Real Earnings Growth:
(+0.5% Erngs Growth - 3.0% Inflation)=-2.5% is Bearish.
4. Current Vs. Expected P/E Ratios:
(18.6-16.9)/16.9 = +10.1% is Slightly Bullish.
5. Investor Sentiment (Price Momentum):
a. Longer-Term (Price Change vs. 9 months ago for Russell 3000):
(73.33-86.64)/86.64=-15.4% is Very Bearish.
b. Shorter-Term (using NYSE & NASDAQ Avg. 30-Day Advance/Decline Oscillators): Neutral.
The average of the longer-term and the shorter term momentum indicators provides the result for this metric. Thus, since one metric is 'very bearish' while the other is 'neutral', the overall Investor Sentiment rating is now Slightly Bearish.
6. Covered Calls Advisor's Gut Feeling: Neutral
The composite overall average outlook for the six indicators above is NEUTRAL, 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 that corresponds with this assessment: "The Covered Calls Advisor says: The Current Overall Stock Market Outlook is: NEUTRAL. The Corresponding Investing Strategy is: "SELL AT-THE-MONEY COVERED CALLS."
By 'at-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 1.0% below and 1.0% above the options strike price.
Thursday, July 10, 2008
Continuation Transaction -- Travelers Cos. Inc.
The following transaction was made today to establish a covered calls position against the 500 shares of TRV:
07/10/08 Covered Calls Transaction -- STO 5 Jul08 $45.00 Calls @ $.80
The Transactions History to date is as follows:
05/22/08 Initial Stock Purchase Transaction -- Bought 500 TRV @ $49.28
06/05/08 Initial Calls Sold Transaction -- Sold 5 TRV Jun08 $50 Calls @ $.85
06/20/08 Jun08 Options Expired
07/10/08 Covered Calls Continuation Transaction -- Sold 5 Jul08 $45.00 Calls @ $.80
Note: Price of TRV was $44.50 when the calls were sold today.
The overall performance results(including commissions) for the TRV transactions through the Jul08 expiration would be as follows:
Stock Purchase Cost: $24,648.95
($49.28*500+$8.95 commission)
Net Profit:
(a) Options Income: +$797.60 (500*($.85+$.80) - 2*$13.70 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation (If exercised): -$2,157.90
= ($45.00-$49.28)*500 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $45.00): -$1,360.30
= (+$797.60 +$0 -$2,157.90)
Annualized Return If Exercised (ARIE) -34.7%
(-$1,360.30/$24,648.95)*(365/58 days)
07/10/08 Covered Calls Transaction -- STO 5 Jul08 $45.00 Calls @ $.80
The Transactions History to date is as follows:
05/22/08 Initial Stock Purchase Transaction -- Bought 500 TRV @ $49.28
06/05/08 Initial Calls Sold Transaction -- Sold 5 TRV Jun08 $50 Calls @ $.85
06/20/08 Jun08 Options Expired
07/10/08 Covered Calls Continuation Transaction -- Sold 5 Jul08 $45.00 Calls @ $.80
Note: Price of TRV was $44.50 when the calls were sold today.
The overall performance results(including commissions) for the TRV transactions through the Jul08 expiration would be as follows:
Stock Purchase Cost: $24,648.95
($49.28*500+$8.95 commission)
Net Profit:
(a) Options Income: +$797.60 (500*($.85+$.80) - 2*$13.70 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation (If exercised): -$2,157.90
= ($45.00-$49.28)*500 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $45.00): -$1,360.30
= (+$797.60 +$0 -$2,157.90)
Annualized Return If Exercised (ARIE) -34.7%
(-$1,360.30/$24,648.95)*(365/58 days)
Tuesday, July 8, 2008
Establish Hewlett-Packard Covered Calls
A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) as follows:
Established Hewlett-Packard(HPQ) Covered Calls for Jul08.
07/08/08 Bought 400 HPQ @ $43.74
07/08/08 Sold 4 HPQ Jul08 $45.00 Calls @ $.50
Annualized Return If Stock Price Unchanged (ARIU): +37.9%
Annualized Return If Exercised (ARIE): +133.5%
Downside Breakeven Protection: 1.1%
Established Hewlett-Packard(HPQ) Covered Calls for Jul08.
07/08/08 Bought 400 HPQ @ $43.74
07/08/08 Sold 4 HPQ Jul08 $45.00 Calls @ $.50
Annualized Return If Stock Price Unchanged (ARIU): +37.9%
Annualized Return If Exercised (ARIE): +133.5%
Downside Breakeven Protection: 1.1%
Monday, July 7, 2008
Establish Petroleo Brasileiro (Petrobras) Covered Calls
A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) as follows:
Established Petrobras(PBR) Covered Calls for Jul08.
07/07/08 Bought 400 PBR @ $65.95
07/07/08 Sold 4 PBR Jul08 $65.00 Calls @ $2.95
Annualized Return If Stock Price Unchanged (ARIU): +92.2%
Annualized Return If Exercised (ARIE): +92.2%
Downside Breakeven Protection: 4.5%
Established Petrobras(PBR) Covered Calls for Jul08.
07/07/08 Bought 400 PBR @ $65.95
07/07/08 Sold 4 PBR Jul08 $65.00 Calls @ $2.95
Annualized Return If Stock Price Unchanged (ARIU): +92.2%
Annualized Return If Exercised (ARIE): +92.2%
Downside Breakeven Protection: 4.5%
Wednesday, July 2, 2008
Continuation Transaction -- Honeywell
The following transaction was made today to establish a covered calls position against the 500 shares of HON:
07/02/08 Covered Calls Transaction -- STO 5 Jul08 $52.50 Calls @ $.85
The Transactions History to date is as follows:
05/23/08 Initial Stock Purchase Transaction -- Bought 500 HON @ $58.89
05/23/08 Initial Calls Sold Transaction -- Sold 5 HON Jun08 $60 Calls @ $1.20
06/20/08 Jun08 Options Expired
07/02/08 Covered Calls Continuation Transaction -- Sold 5 Jul08 $52.50 Calls @ $.85
Note: Price of HON was $50.12 when the calls were sold today.
The overall performance results(including commissions) for the HON transactions through the Jul08 expiration would be as follows:
Stock Purchase Cost: $29,453.95
($58.89*500+$8.95 commission)
Net Profit:
(a) Options Income: +$997.60 (500*($1.20+$.85) - 2*$13.70 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation (If exercised): -$3,177.10
= ($52.50-$58.89)*500 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $52.50): -$2,179.50
= (+$997.60 +$0 -$3,177.10)
Annualized Return If Exercised (ARIE) -47.4%
(-$2,179.50/$29,453.95)*(365/57 days)
07/02/08 Covered Calls Transaction -- STO 5 Jul08 $52.50 Calls @ $.85
The Transactions History to date is as follows:
05/23/08 Initial Stock Purchase Transaction -- Bought 500 HON @ $58.89
05/23/08 Initial Calls Sold Transaction -- Sold 5 HON Jun08 $60 Calls @ $1.20
06/20/08 Jun08 Options Expired
07/02/08 Covered Calls Continuation Transaction -- Sold 5 Jul08 $52.50 Calls @ $.85
Note: Price of HON was $50.12 when the calls were sold today.
The overall performance results(including commissions) for the HON transactions through the Jul08 expiration would be as follows:
Stock Purchase Cost: $29,453.95
($58.89*500+$8.95 commission)
Net Profit:
(a) Options Income: +$997.60 (500*($1.20+$.85) - 2*$13.70 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation (If exercised): -$3,177.10
= ($52.50-$58.89)*500 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $52.50): -$2,179.50
= (+$997.60 +$0 -$3,177.10)
Annualized Return If Exercised (ARIE) -47.4%
(-$2,179.50/$29,453.95)*(365/57 days)
Established EMCOR Group Covered Calls
A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) as follows:
Established EMCOR Group(EME) Covered Calls for Jul08.
07/02/08 Bought 500 EME @ $26.64
07/02/08 Sold 5 EME Jul08 $27.50 Calls @ $.70
Annualized Return If Stock Price Unchanged (ARIU): +56.3%
Annualized Return If Exercised (ARIE): +125.7%
Downside Breakeven Protection: 2.6%
Established EMCOR Group(EME) Covered Calls for Jul08.
07/02/08 Bought 500 EME @ $26.64
07/02/08 Sold 5 EME Jul08 $27.50 Calls @ $.70
Annualized Return If Stock Price Unchanged (ARIU): +56.3%
Annualized Return If Exercised (ARIE): +125.7%
Downside Breakeven Protection: 2.6%
Tuesday, July 1, 2008
Returns -- Through June 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 Russell 3000 Index (IWV) benchmark. Previously the benchmark portfolio used was the Schwab MarketTrack Balanced Portfolio(SWBGX), but because the SWBGX contains about 60% stocks and 40% bonds, it was decided that it would be preferable to compare our all stocks covered calls portfolio against a commonly used all stocks benchmark.
1. One-Month Result (June 2008):
At market close on 06/30/2008, the total Covered Calls Advisor Portfolio (CCAP) value was $237,128.74, a $16,268.08 decrease in the overall portfolio value compared with the $253,396.82 at the end of May(05/30/2008).
CCAP June 2008 Absolute Return = -6.4%
($237,128.74-$253,396.82)/$253,396.82
Benchmark Comparison: June 2008 Absolute Return for IWV
= -8.1%
($74.90-$81.54)/$81.54
2. 2008 Year-to-Date Results (Jan 1st through June 30th, 2008):
CCAP 2008 Year-to-Date Absolute Return = -5.6%
($253,396.82-$257,886.51)/$257,886.51
Benchmark Russell 3000(IWV) 2008 Yr-to-Date Absolute Return = -11.3%
($74.90-$84.40)/$84.40
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 Russell 3000 (IWV) benchmark during the same time period.
CCAP 2007 Absolute Return = +3.2%
($257,886.51-$250,000.00)/$250,000.00
Benchmark (IWV) 2007 Absolute Return = -1.2%
($84.40-$85.43)/$85.43
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 Russell 3000(IWV) 2007 Annualized Return = -4.1%
[($84.40-$85.43)/$85.43]*(365/108 days)
This Advisor's Overall Market Meter continues to indicate 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.
1. One-Month Result (June 2008):
At market close on 06/30/2008, the total Covered Calls Advisor Portfolio (CCAP) value was $237,128.74, a $16,268.08 decrease in the overall portfolio value compared with the $253,396.82 at the end of May(05/30/2008).
CCAP June 2008 Absolute Return = -6.4%
($237,128.74-$253,396.82)/$253,396.82
Benchmark Comparison: June 2008 Absolute Return for IWV
= -8.1%
($74.90-$81.54)/$81.54
2. 2008 Year-to-Date Results (Jan 1st through June 30th, 2008):
CCAP 2008 Year-to-Date Absolute Return = -5.6%
($253,396.82-$257,886.51)/$257,886.51
Benchmark Russell 3000(IWV) 2008 Yr-to-Date Absolute Return = -11.3%
($74.90-$84.40)/$84.40
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 Russell 3000 (IWV) benchmark during the same time period.
CCAP 2007 Absolute Return = +3.2%
($257,886.51-$250,000.00)/$250,000.00
Benchmark (IWV) 2007 Absolute Return = -1.2%
($84.40-$85.43)/$85.43
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 Russell 3000(IWV) 2007 Annualized Return = -4.1%
[($84.40-$85.43)/$85.43]*(365/108 days)
This Advisor's Overall Market Meter continues to indicate 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.
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