Both 2008 year-to-date and 2007 performance results for the Covered Calls Advisor Portfolio (CCAP) are presented below. In each instance, CCAP results are compared against the Russell 3000 Index ETF(IWV) benchmark.
1. 2008 Year-to-Date Results (Jan 1st through Sep 30th, 2008):
CCAP 2008 Year-to-Date Absolute Return = -13.96%
($221,860.17-$257,886.51)/$257,886.51
Benchmark Russell 3000(IWV) 2008 Yr-to-Date Absolute Return =
-18.50%
($68.79-$84.40)/$84.40
The CCAP is currently tracking at 4.54 percentage points (18.50%-13.96%) better than the market benchmark so far in 2008.
2. 2007 Results:
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 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. By 'at-the-money', this advisor means that for a covered calls portfolio, on average covered calls positions should be established somewhere between 1.0% below and 1.0% above the strike price.
Tuesday, September 30, 2008
Friday, September 26, 2008
Spirit Aerosystems -- Closed
The position in Spirit Aerosystemsn(SPR) was closed today by selling the 300 shares owned. This was a poor investment choice -- as a major supplier to Boeing, Spirit stock has declined rapidly as a direct result of the ongoing and unresolved strike against Boeing.
The Transactions History to date was as follows:
08/18/08 Bought 300 SPR @ $23.35
08/18/08 Sold 3 SPR Sep08 $25.00 Calls @ $.70
09/20/08 Sep08 Options Expired
09/26/08 Sold to Close 300 Shares SPR @ $16.00
The overall performance results(including commissions)for the SPR transactions were as follows:
Stock Purchase Cost: $7,013.95
($23.35*300+$8.95 commission)
Net Profit:
(a) Options Income: +$198.80 (300*$.70-$11.20 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation: -$2,222.90
= ($23.35-$16.00)*300 - 2*$8.95 commissions
Total Net Profit: -$2,024.10
= (+$198.80 +$0 -$2,222.90)
Annualized Return: -270.1%
(-$2,024.10/$7,013.95)*(365/39 days)
The Transactions History to date was as follows:
08/18/08 Bought 300 SPR @ $23.35
08/18/08 Sold 3 SPR Sep08 $25.00 Calls @ $.70
09/20/08 Sep08 Options Expired
09/26/08 Sold to Close 300 Shares SPR @ $16.00
The overall performance results(including commissions)for the SPR transactions were as follows:
Stock Purchase Cost: $7,013.95
($23.35*300+$8.95 commission)
Net Profit:
(a) Options Income: +$198.80 (300*$.70-$11.20 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation: -$2,222.90
= ($23.35-$16.00)*300 - 2*$8.95 commissions
Total Net Profit: -$2,024.10
= (+$198.80 +$0 -$2,222.90)
Annualized Return: -270.1%
(-$2,024.10/$7,013.95)*(365/39 days)
Continuation Transactions -- Accenture and Microsoft
Today, covered calls positions were established against two companies already owned in the Covered Calls Advisor Portfolio(CCAP). As shown by the transactions history below, the Sep08 options expired worthless and new options were sold today to roll-out to Oct08 covered call positions.
1. Accenture(ACN) Continuation Transaction
The following transaction was made today to establish a covered calls position against the 300 shares owned in Accenture(ACN):
09/26/08 Covered Calls Continuation Transaction -- STO 3 Oct08 $40.00 Calls @ $.70
The Transactions History to date is as follows:
08/18/08 Initial Stock Purchase Transaction -- Bought 300 ACN @ $41.01
08/18/08 Initial Calls Sold Transaction -- Sold 3 ACN Sep08 $40.00 Calls @ $1.90
09/20/08 Sep08 Options Expired
09/26/08 Covered Calls Continuation Transaction -- STO 3 Oct08 $40.00 Calls @ $.70
The overall performance results(including commissions) for the ACN transactions through the Oct08 expiration would be as follows:
Stock Purchase Cost: $12,311.95
($41.01*300+$8.95 commission)
Net Profit:
(a) Options Income: +$757.60 (300*($1.90+$.70) - 2*$11.20 commissions)
(b) Dividend Income: $0.00
(c) Capital Appreciation (If exercised): -$320.90
= ($40.00-$41.01)*300 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $40.00): +$436.70
= (+$757.60 +$0-$320.90)
Annualized Return If Exercised (ARIE) +21.2%
(+$436.70/$12,311.95)*(365/61 days)
2. Microsoft(MSFT) Continuation Transaction
The following transaction was made today to establish a covered calls position against the 300 shares owned in Microsoft(MSFT):
09/26/08 Covered Calls Continuation Transaction -- STO 5 Oct08 $28.00 Calls @ $.55
The Transactions History to date is as follows:
08/18/08 Bought 500 MSFT @ $27.95
08/18/08 Sold 5 MSFT Sep08 $28.00 Calls @ $.81
09/20/08 Sep08 Options Expired
09/26/08 Covered Calls Continuation Transaction -- STO 5 Oct08 $28.00 Calls @ $.55
The overall performance results(including commissions) for the MSFT transactions are as follows:
Stock Purchase Cost: $13,983.95
($27.95*500+$8.95 commission)
Net Profit:
(a) Options Income: +$654.60 (500*($.81+$.55) - 2*$12.70 commissions)
(b) Dividend Income: +$0
(c) Capital Appreciation (If exercised): +$7.10
= ($28.00-$27.95)*500 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $28.00): +$661.70
= (+$654.60+$0+$7.10)
Annualized Return If Exercised (ARIE) +28.3%
(+$661.70/$13,983.95)*(365/61 days)
1. Accenture(ACN) Continuation Transaction
The following transaction was made today to establish a covered calls position against the 300 shares owned in Accenture(ACN):
09/26/08 Covered Calls Continuation Transaction -- STO 3 Oct08 $40.00 Calls @ $.70
The Transactions History to date is as follows:
08/18/08 Initial Stock Purchase Transaction -- Bought 300 ACN @ $41.01
08/18/08 Initial Calls Sold Transaction -- Sold 3 ACN Sep08 $40.00 Calls @ $1.90
09/20/08 Sep08 Options Expired
09/26/08 Covered Calls Continuation Transaction -- STO 3 Oct08 $40.00 Calls @ $.70
The overall performance results(including commissions) for the ACN transactions through the Oct08 expiration would be as follows:
Stock Purchase Cost: $12,311.95
($41.01*300+$8.95 commission)
Net Profit:
(a) Options Income: +$757.60 (300*($1.90+$.70) - 2*$11.20 commissions)
(b) Dividend Income: $0.00
(c) Capital Appreciation (If exercised): -$320.90
= ($40.00-$41.01)*300 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $40.00): +$436.70
= (+$757.60 +$0-$320.90)
Annualized Return If Exercised (ARIE) +21.2%
(+$436.70/$12,311.95)*(365/61 days)
2. Microsoft(MSFT) Continuation Transaction
The following transaction was made today to establish a covered calls position against the 300 shares owned in Microsoft(MSFT):
09/26/08 Covered Calls Continuation Transaction -- STO 5 Oct08 $28.00 Calls @ $.55
The Transactions History to date is as follows:
08/18/08 Bought 500 MSFT @ $27.95
08/18/08 Sold 5 MSFT Sep08 $28.00 Calls @ $.81
09/20/08 Sep08 Options Expired
09/26/08 Covered Calls Continuation Transaction -- STO 5 Oct08 $28.00 Calls @ $.55
The overall performance results(including commissions) for the MSFT transactions are as follows:
Stock Purchase Cost: $13,983.95
($27.95*500+$8.95 commission)
Net Profit:
(a) Options Income: +$654.60 (500*($.81+$.55) - 2*$12.70 commissions)
(b) Dividend Income: +$0
(c) Capital Appreciation (If exercised): +$7.10
= ($28.00-$27.95)*500 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $28.00): +$661.70
= (+$654.60+$0+$7.10)
Annualized Return If Exercised (ARIE) +28.3%
(+$661.70/$13,983.95)*(365/61 days)
Thursday, September 25, 2008
Continuation Transactions -- Altria, iShares MSCI China ETF, iShares MSCI South Korea ETF, Petrobras, and St Jude Medical
Today, covered calls positions were established against five equities already owned in the Covered Calls Advisor Portfolio(CCAP). As shown by the transactions history below, the Sep08 options expired worthless and new options were sold today to roll-out to Oct08 covered call positions.
1. Altria(MO) Continuation Transaction
The following transaction was made today to establish a covered calls position against the 500 shares owned in Altria(MO):
09/25/08 Covered Calls Continuation Transaction -- STO 5 Oct08 $21.00 Calls @ $.43
The Transactions History to date is as follows:
08/19/08 Initial Calls Sold Transaction -- Bought 500 MO @ $20.91
08/19/08 Initial Calls Sold Transaction -- Sold 5 MO Sep08 $21.00 Calls @ $.51
9/11/08 Ex-Dividend of $145.00 ($.29 * 500 shares)
09/20/08 Sep08 Options Expired
09/25/08 Covered Calls Continuation Transaction -- STO 5 Oct08 $21.00 Calls @ $.43
The overall performance results(including commissions) for the MO transactions through the Oct08 expiration would be as follows:
Stock Purchase Cost: $10,463.95
($20.91*500+$8.95 commission)
Net Profit:
(a) Options Income: +$444.60 (500*($.51+$.43) - 2*$12.70 commissions)
(b) Dividend Income: +$145.00 ($.29 per share*500 shares ex-div on 9/11/08)
(c) Capital Appreciation (If exercised): +$27.10
= ($21.00-$20.91)*500 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $21.00): +$616.70
= (+$444.60 +$145.00 +$27.10)
Annualized Return If Exercised (ARIE) +35.9%
(+$616.70/$10,463.95)*(365/60 days)
2. iShares MSCI China ETF(FXI) Continuation Transaction
The following transaction was made today to establish a covered calls position against the 800 shares owned in iShares MSCI China ETF(FXI):
09/25/08 Covered Calls Continuation Transaction -- STO 8 Oct08 $40.0 Calls @ $1.10
The Transactions History to date is as follows:
08/18/08 Initial Calls Sold Transaction -- Bought 800 FXI @ $40.60
08/18/08 Initial Calls Sold Transaction -- Sold 8 FXI Sep08 $44.00 Calls @ $.60
09/20/08 Sep08 Options Expired
09/25/08 Covered Calls Continuation Transaction -- STO 8 Oct08 $40.00 Calls @ $1.10
The overall performance results(including commissions) for the FXI transactions through the Oct08 expiration would be as follows:
Stock Purchase Cost: $32,488.95
($40.60*800+$8.95 commission)
Net Profit:
(a) Options Income: +$1,330.10 (800*($.60 + $1.10) - 2*$14.95 commissions)
(b) Dividend Income: +$0
(c) Capital Appreciation (If exercised): -$497.90
= ($40.00-$40.60)*800 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $40.00): +$832.20
= (+$1,330.10 +$0.00 -$497.90)
Annualized Return If Exercised (ARIE) +15.3%
(+$832.20/$32,488.95)*(365/61 days)
3. iShares MSCI South Korea ETF(EWY) Continuation Transaction
The following transaction was made today to establish a covered calls position against the 700 shares owned in iShares MSCI South Korea ETF(EWY):
09/25/08 Covered Calls Continuation Transaction -- STO 7 Oct08 $47.00 Calls @ $.65
The Transactions History to date is as follows:
08/18/08 Initial Stock Purchase Transaction -- Bought 700 EWY @ $48.35
08/18/08 Initial Calls Sold Transaction -- Sold 7 EWY Sep08 $50 Calls @ $1.05
09/20/08 Sep08 Options Expired
09/25/08 Covered Calls Continuation Transaction -- Sold 7 EWY Oct08 $47.00 Calls @
$.65
The overall performance results(including commissions) for the EWY transactions are as follows:
Stock Purchase Cost: $33,853.95
($48.35*700+$8.95 commission)
Net Profit:
(a) Options Income: +$1,161.60 (700*($1.05+$.65) - 2*$14.20 commissions)
(b) Dividend Income: +$0
(c) Capital Appreciation (If exercised): -$962.90
= ($47.00-$48.35)*700 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $47.00): +$198.70
= (+$1,161.60+$0-$962.90)
Annualized Return If Exercised (ARIE) +3.5%
(+$198.70/$33,853.95)*(365/61 days)
4. Petrobras(PBR) Continuation Transaction
The following transaction was made today to establish a covered calls position against the 400 shares owned in Petrobras(PBR):
09/25/08 Covered Calls Continuation Transaction -- STO 4 Oct08 $47.50 Calls @ $2.70
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.
08/16/08 Aug08 Options Expired
08/18/08 Covered Calls Continuation Transaction -- STO 4 Sep08 $55.00 Calls @ $.90
Note: Price of PBR was $49.45 when the calls were sold today.
09/20/08 Sep08 Options Expired
09/25/08 Covered Calls Continuation Transaction -- STO 4 Oct08 $47.50 Calls @ $2.70
The overall performance results(including commissions) for the PBR transactions are as follows:
Stock Purchase Cost: $26,388.95
($65.95*500+$8.95 commission)
Net Profit:
(a) Options Income: +$2,972.20 (400*($2.95+$1.00+$.90+$2.70) - 4*$11.95 commissions)
(b) Dividend Income: +$0
(c) Capital Appreciation (If exercised): -$7,397.90
= ($47.50-$65.95)*400 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $47.50): -$4,425.70
= (+$2,972.20+$0-$7,397.90)
Annualized Return If Exercised (ARIE) -59.4%
(-$4,425.70/$26,388.95)*(365/103 days)
5. St Jude Medical(STJ) Continuation Transaction
The following transaction was made today to establish a covered calls position against the 400 shares owned in St Jude Medical(STJ):
09/25/08 Covered Calls Continuation Transaction -- STO 4 Oct08 $45.00 Calls @ $1.60
The Transactions History to date is as follows:
08/18/08 Initial Stock Purchase Transaction -- Bought 400 STJ @ $46.36
08/18/08 Initial Calls Sold Transaction -- Sold 4 STJ Sep08 $45.00 Calls @ $2.40
09/20/08 Sep08 Options Expired
09/25/08 Covered Calls Continuation Transaction -- Sold 4 STJ Oct08 $45.00 Calls @ $1.60
The overall performance results(including commissions) for the STJ transactions are as follows:
Stock Purchase Cost: $18,552.95
($46.36*400+$8.95 commission)
Net Profit:
(a) Options Income: +$1,576.10 (400*($2.40+$1.60) - 2*$11.95 commissions)
(b) Dividend Income: +$0
(c) Capital Appreciation (If exercised): -$561.90
= ($45.00-$46.36)*400 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $45.00): +$1,014.20
= (+$1,576.10+$0-$561.90)
Annualized Return If Exercised (ARIE) +32.7%
(+$1,014.20/$18,552.95)*(365/61 days)
1. Altria(MO) Continuation Transaction
The following transaction was made today to establish a covered calls position against the 500 shares owned in Altria(MO):
09/25/08 Covered Calls Continuation Transaction -- STO 5 Oct08 $21.00 Calls @ $.43
The Transactions History to date is as follows:
08/19/08 Initial Calls Sold Transaction -- Bought 500 MO @ $20.91
08/19/08 Initial Calls Sold Transaction -- Sold 5 MO Sep08 $21.00 Calls @ $.51
9/11/08 Ex-Dividend of $145.00 ($.29 * 500 shares)
09/20/08 Sep08 Options Expired
09/25/08 Covered Calls Continuation Transaction -- STO 5 Oct08 $21.00 Calls @ $.43
The overall performance results(including commissions) for the MO transactions through the Oct08 expiration would be as follows:
Stock Purchase Cost: $10,463.95
($20.91*500+$8.95 commission)
Net Profit:
(a) Options Income: +$444.60 (500*($.51+$.43) - 2*$12.70 commissions)
(b) Dividend Income: +$145.00 ($.29 per share*500 shares ex-div on 9/11/08)
(c) Capital Appreciation (If exercised): +$27.10
= ($21.00-$20.91)*500 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $21.00): +$616.70
= (+$444.60 +$145.00 +$27.10)
Annualized Return If Exercised (ARIE) +35.9%
(+$616.70/$10,463.95)*(365/60 days)
2. iShares MSCI China ETF(FXI) Continuation Transaction
The following transaction was made today to establish a covered calls position against the 800 shares owned in iShares MSCI China ETF(FXI):
09/25/08 Covered Calls Continuation Transaction -- STO 8 Oct08 $40.0 Calls @ $1.10
The Transactions History to date is as follows:
08/18/08 Initial Calls Sold Transaction -- Bought 800 FXI @ $40.60
08/18/08 Initial Calls Sold Transaction -- Sold 8 FXI Sep08 $44.00 Calls @ $.60
09/20/08 Sep08 Options Expired
09/25/08 Covered Calls Continuation Transaction -- STO 8 Oct08 $40.00 Calls @ $1.10
The overall performance results(including commissions) for the FXI transactions through the Oct08 expiration would be as follows:
Stock Purchase Cost: $32,488.95
($40.60*800+$8.95 commission)
Net Profit:
(a) Options Income: +$1,330.10 (800*($.60 + $1.10) - 2*$14.95 commissions)
(b) Dividend Income: +$0
(c) Capital Appreciation (If exercised): -$497.90
= ($40.00-$40.60)*800 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $40.00): +$832.20
= (+$1,330.10 +$0.00 -$497.90)
Annualized Return If Exercised (ARIE) +15.3%
(+$832.20/$32,488.95)*(365/61 days)
3. iShares MSCI South Korea ETF(EWY) Continuation Transaction
The following transaction was made today to establish a covered calls position against the 700 shares owned in iShares MSCI South Korea ETF(EWY):
09/25/08 Covered Calls Continuation Transaction -- STO 7 Oct08 $47.00 Calls @ $.65
The Transactions History to date is as follows:
08/18/08 Initial Stock Purchase Transaction -- Bought 700 EWY @ $48.35
08/18/08 Initial Calls Sold Transaction -- Sold 7 EWY Sep08 $50 Calls @ $1.05
09/20/08 Sep08 Options Expired
09/25/08 Covered Calls Continuation Transaction -- Sold 7 EWY Oct08 $47.00 Calls @
$.65
The overall performance results(including commissions) for the EWY transactions are as follows:
Stock Purchase Cost: $33,853.95
($48.35*700+$8.95 commission)
Net Profit:
(a) Options Income: +$1,161.60 (700*($1.05+$.65) - 2*$14.20 commissions)
(b) Dividend Income: +$0
(c) Capital Appreciation (If exercised): -$962.90
= ($47.00-$48.35)*700 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $47.00): +$198.70
= (+$1,161.60+$0-$962.90)
Annualized Return If Exercised (ARIE) +3.5%
(+$198.70/$33,853.95)*(365/61 days)
4. Petrobras(PBR) Continuation Transaction
The following transaction was made today to establish a covered calls position against the 400 shares owned in Petrobras(PBR):
09/25/08 Covered Calls Continuation Transaction -- STO 4 Oct08 $47.50 Calls @ $2.70
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.
08/16/08 Aug08 Options Expired
08/18/08 Covered Calls Continuation Transaction -- STO 4 Sep08 $55.00 Calls @ $.90
Note: Price of PBR was $49.45 when the calls were sold today.
09/20/08 Sep08 Options Expired
09/25/08 Covered Calls Continuation Transaction -- STO 4 Oct08 $47.50 Calls @ $2.70
The overall performance results(including commissions) for the PBR transactions are as follows:
Stock Purchase Cost: $26,388.95
($65.95*500+$8.95 commission)
Net Profit:
(a) Options Income: +$2,972.20 (400*($2.95+$1.00+$.90+$2.70) - 4*$11.95 commissions)
(b) Dividend Income: +$0
(c) Capital Appreciation (If exercised): -$7,397.90
= ($47.50-$65.95)*400 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $47.50): -$4,425.70
= (+$2,972.20+$0-$7,397.90)
Annualized Return If Exercised (ARIE) -59.4%
(-$4,425.70/$26,388.95)*(365/103 days)
5. St Jude Medical(STJ) Continuation Transaction
The following transaction was made today to establish a covered calls position against the 400 shares owned in St Jude Medical(STJ):
09/25/08 Covered Calls Continuation Transaction -- STO 4 Oct08 $45.00 Calls @ $1.60
The Transactions History to date is as follows:
08/18/08 Initial Stock Purchase Transaction -- Bought 400 STJ @ $46.36
08/18/08 Initial Calls Sold Transaction -- Sold 4 STJ Sep08 $45.00 Calls @ $2.40
09/20/08 Sep08 Options Expired
09/25/08 Covered Calls Continuation Transaction -- Sold 4 STJ Oct08 $45.00 Calls @ $1.60
The overall performance results(including commissions) for the STJ transactions are as follows:
Stock Purchase Cost: $18,552.95
($46.36*400+$8.95 commission)
Net Profit:
(a) Options Income: +$1,576.10 (400*($2.40+$1.60) - 2*$11.95 commissions)
(b) Dividend Income: +$0
(c) Capital Appreciation (If exercised): -$561.90
= ($45.00-$46.36)*400 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $45.00): +$1,014.20
= (+$1,576.10+$0-$561.90)
Annualized Return If Exercised (ARIE) +32.7%
(+$1,014.20/$18,552.95)*(365/61 days)
Establish Dell Inc Covered Calls
A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) as follows:
Established Dell Inc (DELL) Covered Calls for Oct08. Dell currently provides an extremely attractive price for this value-oriented investor. It was purchased today at a P/E of 12, a P/Sales of 0.5, cash at 28% of market cap, and total debt of 6% of market cap. Given Dell's relatively new presence in Best Buy stores, near-term growth potential is good for both revenue and earnings.
09/25/08 Bought 1200 DELL @ $16.73
09/25/08 Sold 12 DELL Oct08 $17.00 Calls @ $.75
Annualized Return If Stock Price Unchanged (ARIU): +71.0%
Annualized Return If Exercised (ARIE): +96.8%
Downside Breakeven Protection: 4.5%
Established Dell Inc (DELL) Covered Calls for Oct08. Dell currently provides an extremely attractive price for this value-oriented investor. It was purchased today at a P/E of 12, a P/Sales of 0.5, cash at 28% of market cap, and total debt of 6% of market cap. Given Dell's relatively new presence in Best Buy stores, near-term growth potential is good for both revenue and earnings.
09/25/08 Bought 1200 DELL @ $16.73
09/25/08 Sold 12 DELL Oct08 $17.00 Calls @ $.75
Annualized Return If Stock Price Unchanged (ARIU): +71.0%
Annualized Return If Exercised (ARIE): +96.8%
Downside Breakeven Protection: 4.5%
Sunday, September 21, 2008
September 2008 Expiration Transactions
The Covered Calls Advisor Portfolio (CCAP) contained a total of 13 positions with September 2008 expirations, with the following results:
- 2 positions (HPQ & STI) 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 was:
Hewlett-Packard Co. +53.5%
SunTrust Banks Inc. +133.0%
- 11 positions in the CCAP (ACN,MO,HON,HUM,FXI,EWY,EWT,MSFT,PBR,SPR, and STJ) ended out-of-the-money. Decisions will be made to either sell the stock, or to keep the stock and sell calls to establish Oct08 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 exercised positions in Hewlett Packard and SunTrust Banks Inc was as follows:
1. Hewlett Packard -- Closed
Transactions History:
08/18/08 Initial Stock Purchase Transaction -- Bought 200 HPQ @ $44.34
08/08/08 Initial Calls Sold Transaction -- Sold 2 HPQ Sep08 $45.00 Calls @ $1.55
09/08/08 Ex-Div of $16.00($.08 * 200 shares)
09/20/08 Sep08 Options Exercised (Note: Closing price on Friday 9/19/08 was $48.26)
The overall performance results(including commissions)for the HPQ transactions through the Sep08 expiration were as follows:
Stock Purchase Cost: $8,876.95
($44.34*200+$8.95 commission)
Net Profit:
(a) Options Income: +$299.55 (200*$1.55 - $10.45 commissions)
(b) Dividend Income: +$16.00
(c) Capital Appreciation: +$114.10
= ($45.00-$44.34)*200 - 2*$8.95 commissions
Total Net Profit: +$429.65
= ($299.55+$16.00+$114.10)
HPQ Annualized Return on Investment: +53.5%
(+$429.65/$8,876.95)*(365/33 days)
2. SunTrust Banks Inc -- Closed
Transactions History:
08/19/08 Initial Stock Purchase Transaction -- Bought 300 STI @ $39.91
08/19/08 Initial Calls Sold Transaction -- Sold 3 STI Sep08 $40.00 Calls @ $2.70
08/28/08 Ex-dividend of $231.00 ($.77 * 300 shares)
09/05/08 Roll-Up Transaction (executed as a Debit Spread):
Bought to close 3 STI Sep08 $40.00 Calls @ $6.11
Sold to open 3 STI Sep08 $45.00 Calls @ $2.41
09/20/08 Sep08 Options Exercised (Note: Closing price on Friday 9/19/08 was $59.20)
The overall performance results(including commissions)for the STI transactions through the Sep08 expiration were as follows:
Stock Purchase Cost: $12,062.50
($39.91*300+$8.95 commission)
Net Profit:
(a) Options Income: -$333.60 (300*($2.70-$6.11+$2.41) - $33.60 commissions)
(b) Dividend Income: +$231.00 ($.77 * 300 shares)
(c) Capital Appreciation: +$1,509.10
= ($45.00-$39.91)*300 - 2*$8.95 commissions
Total Net Profit: +$1,406.50
= (-$333.60+$231.00+$1,509.10)
STI Annualized Return on Investment: +133.0%
(+$1,406.50/$12,062.50)*(365/32 days)
- 2 positions (HPQ & STI) 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 was:
Hewlett-Packard Co. +53.5%
SunTrust Banks Inc. +133.0%
- 11 positions in the CCAP (ACN,MO,HON,HUM,FXI,EWY,EWT,MSFT,PBR,SPR, and STJ) ended out-of-the-money. Decisions will be made to either sell the stock, or to keep the stock and sell calls to establish Oct08 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 exercised positions in Hewlett Packard and SunTrust Banks Inc was as follows:
1. Hewlett Packard -- Closed
Transactions History:
08/18/08 Initial Stock Purchase Transaction -- Bought 200 HPQ @ $44.34
08/08/08 Initial Calls Sold Transaction -- Sold 2 HPQ Sep08 $45.00 Calls @ $1.55
09/08/08 Ex-Div of $16.00($.08 * 200 shares)
09/20/08 Sep08 Options Exercised (Note: Closing price on Friday 9/19/08 was $48.26)
The overall performance results(including commissions)for the HPQ transactions through the Sep08 expiration were as follows:
Stock Purchase Cost: $8,876.95
($44.34*200+$8.95 commission)
Net Profit:
(a) Options Income: +$299.55 (200*$1.55 - $10.45 commissions)
(b) Dividend Income: +$16.00
(c) Capital Appreciation: +$114.10
= ($45.00-$44.34)*200 - 2*$8.95 commissions
Total Net Profit: +$429.65
= ($299.55+$16.00+$114.10)
HPQ Annualized Return on Investment: +53.5%
(+$429.65/$8,876.95)*(365/33 days)
2. SunTrust Banks Inc -- Closed
Transactions History:
08/19/08 Initial Stock Purchase Transaction -- Bought 300 STI @ $39.91
08/19/08 Initial Calls Sold Transaction -- Sold 3 STI Sep08 $40.00 Calls @ $2.70
08/28/08 Ex-dividend of $231.00 ($.77 * 300 shares)
09/05/08 Roll-Up Transaction (executed as a Debit Spread):
Bought to close 3 STI Sep08 $40.00 Calls @ $6.11
Sold to open 3 STI Sep08 $45.00 Calls @ $2.41
09/20/08 Sep08 Options Exercised (Note: Closing price on Friday 9/19/08 was $59.20)
The overall performance results(including commissions)for the STI transactions through the Sep08 expiration were as follows:
Stock Purchase Cost: $12,062.50
($39.91*300+$8.95 commission)
Net Profit:
(a) Options Income: -$333.60 (300*($2.70-$6.11+$2.41) - $33.60 commissions)
(b) Dividend Income: +$231.00 ($.77 * 300 shares)
(c) Capital Appreciation: +$1,509.10
= ($45.00-$39.91)*300 - 2*$8.95 commissions
Total Net Profit: +$1,406.50
= (-$333.60+$231.00+$1,509.10)
STI Annualized Return on Investment: +133.0%
(+$1,406.50/$12,062.50)*(365/32 days)
Friday, September 5, 2008
Roll-Up of SunTrust Banks Inc Covered Calls
Today, with the price of STI at $45.41, a roll-up spread transaction was executed as follows:
9/5/08 Executed debit spread transaction by simultaneously Buying-to-Close 3 STI Sep08 $40 Calls and Selling-to-Open 3 STI Sep08 $45 Calls. The net debit price was $3.70 ($6.11-$2.41). The ‘net debit to strike price difference ratio’ was 70% [($6.11-$2.41)/($45.00-$40.00)]*100, which achieved this advisor’s desired minimum threshold of <75% before executing a roll-up.
The transactions history to date is:
08/19/08 Bought 300 STI @ $39.91
08/19/08 Sold 3 STI Sep08 $40.00 Calls @ $2.70
Note: Annualized return below includes $.77 ex-dividend on 8/28/08
9/5/08 Roll-Up Transaction (executed as a Debit Spread):
Bought to close 3 STI Sep08 $40.00 Calls @ $6.11
Sold to open 3 STI Sep08 $45.00 Calls @ $2.41
The annualized return below demonstrates the potential for extraordinary returns that can be achieved if a covered calls roll-up transaction is successful (i.e. exercised at the new, higher strike price):
Annualized Return If Exercised: +138.9%
Downside Breakeven Protection: 12.0%
9/5/08 Executed debit spread transaction by simultaneously Buying-to-Close 3 STI Sep08 $40 Calls and Selling-to-Open 3 STI Sep08 $45 Calls. The net debit price was $3.70 ($6.11-$2.41). The ‘net debit to strike price difference ratio’ was 70% [($6.11-$2.41)/($45.00-$40.00)]*100, which achieved this advisor’s desired minimum threshold of <75% before executing a roll-up.
The transactions history to date is:
08/19/08 Bought 300 STI @ $39.91
08/19/08 Sold 3 STI Sep08 $40.00 Calls @ $2.70
Note: Annualized return below includes $.77 ex-dividend on 8/28/08
9/5/08 Roll-Up Transaction (executed as a Debit Spread):
Bought to close 3 STI Sep08 $40.00 Calls @ $6.11
Sold to open 3 STI Sep08 $45.00 Calls @ $2.41
The annualized return below demonstrates the potential for extraordinary returns that can be achieved if a covered calls roll-up transaction is successful (i.e. exercised at the new, higher strike price):
Annualized Return If Exercised: +138.9%
Downside Breakeven Protection: 12.0%
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