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 Oct 31st, 2008):
CCAP 2008 Year-to-Date Absolute Return = -21.8%
($201,744.61-$257,886.51)/$257,886.51
Benchmark Russell 3000(IWV) 2008 Yr-to-Date Absolute Return = -33.8%
($55.85-$84.40)/$84.40
The CCAP is currently tracking at 12.0 percentage points (33.8%-21.8%) 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.
Friday, October 31, 2008
Monday, October 20, 2008
Continuation Transactions -- Altria, General Electric, and iShares MSCI China ETF
Today, covered calls positions were established against four equities already owned in the Covered Calls Advisor Portfolio(CCAP). As shown by the transactions history below, the Oct08 options expired worthless and new options were sold today to roll-out to Nov08 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):
10/20/08 Covered Calls Continuation Transaction -- STO 5 Nov08 $21.00 Calls @ $.67
The Transactions History to date is as follows:
08/19/08 Initial Stock Purchase 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
10/18/08 Oct08 Options Expired
10/20/08 Covered Calls Continuation Transaction -- STO 5 Nov08 $21.00 Calls @ $.67
The overall performance results(including commissions) for the MO transactions through the Nov08 expiration would be as follows:
Stock Purchase Cost: $10,463.95
($20.91*500+$8.95 commission)
Net Profit:
(a) Options Income: +$779.60 (500*($.51+$.43+$.67) - 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): +$951.70
= (+$779.60 +$145.00 +$27.10)
Annualized Return If Exercised (ARIE) +37.7%
(+$951.70/$10,463.95)*(365/88 days)
2. General Electric(GE) Continuation Transaction
The following transaction was made today to establish a covered calls position against the 200 shares owned in General Electric(GE):
10/20/08 Covered Calls Continuation Transaction -- STO 2 Nov08 $21.00 Calls @ $.88
The Transactions History to date is as follows:
10/02/08 Initial Stock Purchase Transaction -- Bought 200 GE @ $22.25
10/02/08 Initial Calls Sold Transaction -- Sold 2 GE Oct08 $22.00 Calls @ $1.53
10/18/08 Oct08 Options Expired
10/20/08 Covered Calls Continuation Transaction -- STO 2 Nov08 $21.00 Calls @ $.88
The overall performance results(including commissions) for the GE transactions through the Nov08 expiration would be as follows:
Stock Purchase Cost: $4,458.95
($22.25*200+$8.95 commission)
Net Profit:
(a) Options Income: +$456.60 (200*($1.53+$.88) - 2*$12.70 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If exercised): -$267.90
= ($21.00-$22.25)*200 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $21.00): +$188.70
= (+$456.60 +$0.00 -$267.90)
Annualized Return If Exercised (ARIE) +35.1%
(+$188.70/$4,458.95)*(365/44 days)
3. 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):
10/20/08 Covered Calls Continuation Transaction -- STO 8 Nov08 $34.00 Calls @ $1.30
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
10/18/08 Oct08 Options Expired
10/20/08 Covered Calls Continuation Transaction -- STO 8 Nov08 $34.00 Calls @ $1.30
The overall performance results(including commissions) for the FXI transactions through the Nov08 expiration would be as follows:
Stock Purchase Cost: $32,488.95
($40.60*800+$8.95 commission)
Net Profit:
(a) Options Income: +$2,370.10 (800*($.60 + $1.10 + $1.30) - 2*$14.95 commissions)
(b) Dividend Income: +$0
(c) Capital Appreciation (If exercised): -$5,297.90
= ($34.00-$40.60)*800 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $34.00): -$2,927.80
= (+$2,370.10 +$0.00 -$5,297.90)
Annualized Return If Exercised (ARIE) -37.0%
(-$2,927.80/$32,488.95)*(365/89 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):
10/20/08 Covered Calls Continuation Transaction -- STO 5 Nov08 $21.00 Calls @ $.67
The Transactions History to date is as follows:
08/19/08 Initial Stock Purchase 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
10/18/08 Oct08 Options Expired
10/20/08 Covered Calls Continuation Transaction -- STO 5 Nov08 $21.00 Calls @ $.67
The overall performance results(including commissions) for the MO transactions through the Nov08 expiration would be as follows:
Stock Purchase Cost: $10,463.95
($20.91*500+$8.95 commission)
Net Profit:
(a) Options Income: +$779.60 (500*($.51+$.43+$.67) - 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): +$951.70
= (+$779.60 +$145.00 +$27.10)
Annualized Return If Exercised (ARIE) +37.7%
(+$951.70/$10,463.95)*(365/88 days)
2. General Electric(GE) Continuation Transaction
The following transaction was made today to establish a covered calls position against the 200 shares owned in General Electric(GE):
10/20/08 Covered Calls Continuation Transaction -- STO 2 Nov08 $21.00 Calls @ $.88
The Transactions History to date is as follows:
10/02/08 Initial Stock Purchase Transaction -- Bought 200 GE @ $22.25
10/02/08 Initial Calls Sold Transaction -- Sold 2 GE Oct08 $22.00 Calls @ $1.53
10/18/08 Oct08 Options Expired
10/20/08 Covered Calls Continuation Transaction -- STO 2 Nov08 $21.00 Calls @ $.88
The overall performance results(including commissions) for the GE transactions through the Nov08 expiration would be as follows:
Stock Purchase Cost: $4,458.95
($22.25*200+$8.95 commission)
Net Profit:
(a) Options Income: +$456.60 (200*($1.53+$.88) - 2*$12.70 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If exercised): -$267.90
= ($21.00-$22.25)*200 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $21.00): +$188.70
= (+$456.60 +$0.00 -$267.90)
Annualized Return If Exercised (ARIE) +35.1%
(+$188.70/$4,458.95)*(365/44 days)
3. 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):
10/20/08 Covered Calls Continuation Transaction -- STO 8 Nov08 $34.00 Calls @ $1.30
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
10/18/08 Oct08 Options Expired
10/20/08 Covered Calls Continuation Transaction -- STO 8 Nov08 $34.00 Calls @ $1.30
The overall performance results(including commissions) for the FXI transactions through the Nov08 expiration would be as follows:
Stock Purchase Cost: $32,488.95
($40.60*800+$8.95 commission)
Net Profit:
(a) Options Income: +$2,370.10 (800*($.60 + $1.10 + $1.30) - 2*$14.95 commissions)
(b) Dividend Income: +$0
(c) Capital Appreciation (If exercised): -$5,297.90
= ($34.00-$40.60)*800 - 2*$8.95 commissions
Total Net Profit(If stock price exercised at $34.00): -$2,927.80
= (+$2,370.10 +$0.00 -$5,297.90)
Annualized Return If Exercised (ARIE) -37.0%
(-$2,927.80/$32,488.95)*(365/89 days)
October 2008 Expiration Transactions
The Covered Calls Advisor Portfolio (CCAP) contained a total of 12 positions with October 2008 expirations, with the following results:
- All 12 positions (ACN,DELL,EWT,EWY,FXI,GE,HON,HUM,MO,MSFT,PBR, 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 Nov08 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.
- All 12 positions (ACN,DELL,EWT,EWY,FXI,GE,HON,HUM,MO,MSFT,PBR, 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 Nov08 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.
Thursday, October 2, 2008
Establish General Electric Covered Calls
A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) as follows:
Established General Electric (GE) Covered Calls for Oct08:
10/02/08 Bought 200 GE @ $22.25
10/02/08 Sold 2 GE Oct08 $22.00 Calls @ $1.53
Given GE's $12B stock offering announced today at $22.25 and the strong likelihood that GE's offering is successful (given the fact that the underwriting consortium consists of the strongest banks Bank of America, Citigroup, Deutsche Bank, Goldman Sachs, JP Morgan, and Morgan Stanley), I now have increased confidence that the stock will be able to stay above the $22 strike price for the next 16 days until expiration. In addition, the implied volatility of the GE option was an extraordinarily high 76% when sold this morning thus making the GE option very attractive to sell and also the associated potential annualized return of 131.0% for the covered calls if exercised is especially attractive.
Annualized Return If Exercised (ARIE): +131.0%
Downside Breakeven Protection: 6.9%
Established General Electric (GE) Covered Calls for Oct08:
10/02/08 Bought 200 GE @ $22.25
10/02/08 Sold 2 GE Oct08 $22.00 Calls @ $1.53
Given GE's $12B stock offering announced today at $22.25 and the strong likelihood that GE's offering is successful (given the fact that the underwriting consortium consists of the strongest banks Bank of America, Citigroup, Deutsche Bank, Goldman Sachs, JP Morgan, and Morgan Stanley), I now have increased confidence that the stock will be able to stay above the $22 strike price for the next 16 days until expiration. In addition, the implied volatility of the GE option was an extraordinarily high 76% when sold this morning thus making the GE option very attractive to sell and also the associated potential annualized return of 131.0% for the covered calls if exercised is especially attractive.
Annualized Return If Exercised (ARIE): +131.0%
Downside Breakeven Protection: 6.9%
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