Returns -- Through February 2009

The Covered Calls Advisor Portfolio (CCAP) has substantially outperformed the Russell 3000 benchmark so far in 2009. Selling call options against our stock holdings provides us covered calls investors with a clear relative advantage over the typical buy-and-hold investor; this is especially true during bearish markets (such as we are currently experiencing) as well as during range-bound markets.

Below is the Covered Calls Advisor Portfolio results for January and February 2009 year-to-date. First, a single performance measure is used to determine overall portfolio investment performance results -- it is called 'Total Account Value Return Percent'. A simple example demonstrates how it is calculated:
If the total CCAP portfolio value was $100,000 at the beginning of the calendar year and $110,000 at the end of that year (and with no deposits or withdrawals having been made), then the 'Total Account Value Return Percent' would be +10.0% [($110,000-$100,000)/$100,000]*100.

1. February 2009 Year-to-Date Results:

CCAP Absolute Return (Jan 1st through Feb 28th, 2009) = -7.35%
($185,052.71-$199,733.10)/$199,733.10

Benchmark Russell 3000(IWV) Absolute Return(Jan 1st through Feb 28th,2009) = -17.98%
($42.65-$52.00)/$52.00

Although negative, the CCAP has performed substantially better than the Russell 3000 benchmark thus far in 2009.

2. Prior Years Results:

The Covered Calls Advisor Portfolio (CCAP) was begun in September, 2007. The annualized returns achieved for 2007 and 2008 compared with the Russell 3000 benchmark results were as follows:







For establishing new covered calls positions at this time, the Covered Calls Advisor's Overall Market Meter (shown in the right sidebar near the top of this page) shows that a SLIGHTLY BULLISH investment posture is recommended.
The corresponding covered calls investing approach is to write near-month primarily slightly out-of-the-money covered calls. By 'slightly out-of-the-money', this advisor means that for a covered calls portfolio, on average covered calls positions should be established somewhere between 1.0% and 2.5% below the strike price.

Home Depot Inc -- Continuation Transaction

The following transaction was made to establish a covered calls position against the 300 shares owned in Home Depot Inc (HD):
02/26/09 Sell-to-Open (STO) 3 HD Apr09 $22.50s @ $.65
Normally, the near-month (Mar09) option would be sold, but the premium on the Mar09 was less than the minimum threshold of the Covered Calls Advisor of $.40, so the Apr09 expiration was selected.

The transactions history to date is as follows:
01/27/09 Bought 300 HD @ $21.95
01/27/09 Sold 3 HD Feb09 $22.50 Calls @ $.89
02/21/09 Feb09 Options Expired
02/26/09 Sell-to-Open (STO) 3 HD Apr09 $22.50s @ $.65
Note: The price of HD stock was $20.69 today when the calls were sold.
03/10/09 $67.50 Ex-dividend ($.225*300 shares)

The overall performance results(including commissions) for the HD transactions are as follows:
Stock Purchase Cost: $6,593.95
($21.95*300+$8.95 commission)

Net Profit:
(a) Options Income: +$439.60 (300*($.89+$.65) - 2*$11.20 commissions)
(b) Dividend Income: +$67.50
(c) Capital Appreciation (If stock price unchanged): -$386.95
= ($20.69-$21.95)*300 - $8.95 commissions
(d) Capital Appreciation (If exercised): +$156.05
= ($22.50-$21.95)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $20.69): +$120.15
= (+$439.60 +$67.50 -$386.95)
Total Net Profit(If stock price exercised at $22.50): +$663.15
= (+$439.60 +$67.50 +$156.05)

Absolute Return if Unchanged: +1.8%
=+$120.15/$6,593.95
Annualized Return If Unchanged (ARIU): +12.5%
=(+$120.15/$6,593.95)*(365/53 days)

Absolute Return if Exercised: +10.1%
=+$663.15/$6,593.95
Annualized Return If Exercised (ARIE) +69.3%
=(+$663.15/$6,593.95)*(365/53 days)

Bank of America Corp -- Continuation Transaction

The following transaction was made to establish a covered calls position against the 500 shares owned in Bank of America Corp (BAC):
02/26/09 Sell-to-Open (STO) 5 BAC Mar09 $6s @ $.70

The transactions history to date is as follows:
01/15/09 Bought 500 BAC @ $7.929
01/15/09 Sold 5 BAC Feb09 $7.50 Calls @ $2.08
02/21/09 Feb09 Options Expired
02/26/09 Sell-to-Open (STO) 5 BAC Mar09 $6s @ $.70
Note: The price of BAC stock was $5.68 today when the calls were sold.

The overall performance results(including commissions) for the BAC transactions are as follows:
Stock Purchase Cost: $3,973.45
($7.929*500+$8.95 commission)

Net Profit:
(a) Options Income: +$1,364.60 (500*($2.08+$.70) - 2*$12.70 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged): -$1,133.45
= ($5.68-$7.929)*500 - $8.95 commissions
(d) Capital Appreciation (If exercised): -$973.45
= ($6.00-$7.929)*500 - $8.95 commissions

Total Net Profit(If stock price unchanged at $5.68): +$231.15
= (+$1,364.60 +$0.00 -$1,133.45)
Total Net Profit(If stock price exercised at $6.00): +$391.15
= (+$1,364.60 +$0.00 -$973.45)

Absolute Return if Unchanged: +5.8%
=+$231.15/$3,973.45
Annualized Return If Unchanged (ARIU): +32.7%
=(+$231.15/$3,973.45)*(365/65 days)

Absolute Return if Exercised: +9.8%
=+$391.15/$3,973.45
Annualized Return If Exercised (ARIE) +55.3%
=(+$391.15/$3,973.45)*(365/65 days)

j2 Global Communications Inc -- Continuation Transaction

The following transaction was made to establish a covered calls position against the 300 shares owned in j2 Global Communications Inc (JCOM):
02/25/09 Sell-to-Open (STO) 3 JCOM Mar09 $20s @ $.75

The transactions history to date is as follows:
01/23/09 Initial Stock Purchase Transaction -- Bought 300 JCOM @ $16.76
01/23/09 Inital Calls Sold Transaction -- Sold 3 JCOM Feb09 $17.50 Calls @ $1.00
Roll-Up Spread Transaction:
02/03/09 Buy-to-Close (BTC) 3 JCOM Feb09 $17.5s @ $2.76
02/03/09 Sell-to-Open (STO) 3 JCOM Feb09 $20s @ $1.06
Note: The price of JCOM was $19.90 today when this transaction was executed.
02/21/09 Feb09 Options Expired
02/25/09 Sell-to-Open (STO) 3 JCOM Mar09 $20s @ $.75
Note: JCOM stock was priced at $19.37 today when the calls were sold.

The overall performance results(including commissions) for the JCOM transactions through the Mar09 expiration would be as follows:

Stock Purchase Cost: $5,036.95
($16.76*300+$8.95 commission)

Net Profit:
(a) Options Income: -$18.60 (300*($1.00-$2.76+$1.06+$.75) - 3*$11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If unchanged): +$774.05 = ($19.37-$16.76)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised): +$963.05 = ($20.00-$16.76)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $19.37): +$755.45
= (-$18.60 +$0.00 +$774.05)
Total Net Profit(If stock price exercised at $20.00): +$944.45
= (-$18.60 +$0.00 +$963.05)

Absolute Return (If Stock Price Unchanged at $19.37) = +15.0%+$755.45/$5,036.95
Annualized Return If Unchanged (ARIU) +96.0%
(+$755.45/$5,036.95)*(365/57 days)

Absolute Return If Exercised = +18.8%
+$944.45/$5,036.95
Annualized Return If Exercised (ARIE) +120.1%
(+$944.45/$5,036.95)*(365/57 days)

U.S. Oil Fund ETF -- Continuation Transaction

The following transaction was made to establish a covered calls position against the 200 shares owned in U.S. Oil Fund ETF (USO):
02/25/09 Sell-to-Open (STO) 2 USO Mar09 $28s @ $.95

The transactions history to date is as follows:
12/19/08 Initial Stock Purchase Transaction -- Bought 200 USO @ $32.33
12/19/08 Initial Calls Sold Transaction -- Sold 2 USO Jan09 $34.00 Calls @ $2.40
01/17/09 Jan09 Options Expired
01/20/09 Covered Calls Continuation Transaction -- STO 2 Feb09 $32.00 Calls @ $1.90
02/21/09 Feb09 Options Expired
02/25/09 Sell-to-Open (STO) 2 USO Mar09 $28s @ $.95
Note: the price of USO was $25.97 today when the call options were sold.

The overall performance results(including commissions) for the USO transactions are as follows:
Stock Purchase Cost: $6,474.95
($32.33*200+$8.95 commission)

Net Profit:
(a) Options Income: +$1,018.65 (200*($2.40+$1.90+$.95) - 3*$10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged): -$1,280.95
= ($25.97-$32.33)*200 - $8.95 commissions
(d) Capital Appreciation (If exercised): -$874.95
= ($28.00-$32.33)*200 - $8.95 commissions

Total Net Profit(If stock price unchanged at $25.97): -$262.30
= (+$1,018.65 +$0.00 -$1,280.95)
Total Net Profit(If stock price exercised at $28.00): +$143.70
= (+$1,018.65 +$0.00 -$874.95)

Absolute Return if Unchanged: -4.1%
=-$262.30/$6,474.95
Annualized Return If Unchanged (ARIU): -16.1%
=(-$262.30/$6,474.95)*(365/92 days)

Absolute Return if Exercised: +2.2%
=+$143.70/$6,474.95
Annualized Return If Exercised (ARIE) +13.3%
=(+$143.70/$6,474.95)*(365/61 days)

Establish BHP Billiton LTD ADR Covered Calls

A new covered call position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of a BHP Billiton LTD ADR (BHP) covered call.

BHP Billiton is the world's largest mining company. It is based in Australia but its scope of operations is worldwide. It ranks highly overall in the CCAP 'Buy Alerts' worksheet with 8 of 9 indicators being positive including an attractive p/e ratio of 9.0 and a return-on-equity of 30%.

A summary of the transactions is as follows:

Established BHP Billiton Covered Call for Mar09:
02/25/09 Bought 100 BHP @ $36.75
02/25/09 Sold 1 BHP Mar09 $37.50 Call @ $2.90

Absolute Return if Unchanged: +7.9%
Annualized Return If Unchanged (ARIU): +119.9%
Absolute Return if Exercised: +9.9%
Annualized Return If Exercised (ARIE): +151.0%
Downside Breakeven Price Point: $33.85
Downside Breakeven Protection: 7.9%

Hewlett-Packard -- Continuation Transactions

Today, 300 shares of Hewlett-Packard Company(HPQ) were purchased which added to the 300 shares of HPQ already owned in the Covered Calls Advisor Portfolio(CCAP). Covered calls positions were then established against the 600 shares of HPQ by selling 6 Mar09 $32.50 calls. Today's transactions were as follows:
02/25/09 Bought 300 HPQ @ $29.79
02/25/09 Sell-to-Open (STO) 6 HPQ Mar09 $32.50s @ $.55

The transactions history to date is as follows:
01/20/09 Bought 300 HPQ @ $33.89
01/20/09 Sold 3 HPQ Feb09 $37.50 Calls @ $.80
02/21/09 Feb09 Options Expired
02/25/09 Bought 300 HPQ @ $29.79
02/25/09 Sell-to-Open (STO) 6 HPQ Mar09 $32.50s @ $.55

A decision was made today to double the number of shares held by the CCAP in HPQ from 300 to 600 shares. Hewlett-Packard shares were hit hard as a result of its recent disappointing earnings -- too hard in this advisor's opinion. The fundamentals of this high-quality company remain strong and HPQ continues to rate highly with 8 of 9 metrics being positive on the CCAP 'Buy Alerts' worksheet. It is also believed that the ability of HPQ to successfully integrate its recent EDS acquisition into the services segment of its business model remains underappreciated by investors. In addition, the stock seems attractively valued based on the current price/sales ratio of 0.6, which is a historically low level.

The overall performance results(including commissions) for the HPQ transactions are as follows:
Stock Purchase Cost: $19,121.90
($33.89*300+$29.79*300+2*$8.95 commission)

Net Profit:
(a) Options Income: +$545.35 = (300*$.80 + 600*$.55 - $24.65 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged): -$1,238.95
= [$29.79-$31.84(avg cost basis)]*600 - $8.95 commissions
(d) Capital Appreciation (If exercised): +$387.05
= [$32.50-$31.84(avg cost basis)]*600 - $8.95 commissions

Total Net Profit(If stock price unchanged at $29.79): -$693.60
= (+$545.35 +$0.00 -$1,238.95)
Total Net Profit(If stock price exercised at $32.50): +$932.40
= (+$545.35 +$0.00 +$387.05)

Absolute Return if Unchanged: -3.6%
=-$693.60/$19,121.90
Annualized Return If Unchanged (ARIU): -31.5%
=(-$693.60/$19,121.90)*(365/(60+24)/2 days)

Absolute Return if Exercised: +4.9%
=+$932.40/$19,121.90
Annualized Return If Exercised (ARIE) +42.4%
=(+$932.40/$19,121.90)*(365/(60+24)/2 days)

Establish Sohu.com Inc Covered Calls

A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of Sohu.com Inc (SOHU) covered calls.

Sohu is an internet services provider to consumers and businesses in China. Their services include brand advertising, sponsored search, online games, and wireless services. It ranks very high on the Covered Calls Advisor 'Buy Alerts' worksheet with positive ratings in 8 of the 9 metrics. Most compelling is the relatively modest current P/E ratio of 11.7 for a company with 20%+ expected annual growth rate. In addition, the balance sheet is very strong with high cash levels and no debt.


A summary of the transactions is as follows:

Established Sohu.com Inc Covered Calls for Mar09:
02/24/09 Bought 400 SOHU @ $44.617
02/24/09 Sold 4 SOHU Mar09 $45.00 Calls @ $3.20

Absolute Return if Unchanged: +7.2%
Annualized Return If Unchanged (ARIU): +104.6%
Absolute Return if Exercised: +8.0%
Annualized Return If Exercised (ARIE): +117.2%
Downside Breakeven Price Point: $41.417
Downside Breakeven Protection: 7.2%

Establish General Electric Covered Calls

A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of General Electric Company (GE) covered calls.

At its current price, GE is an excellent value. It now trades at a price/sales ratio of only 0.5 and a P/E ratio of only 7.2 in relation to the estimated 2009 depressed earnings of $1.24. It is this advisor's strong conviction that these valuations are much too low for this stalwart, high-quality company. GE's price could easily double or triple in price over the next two to three years. Additionally, as a result of the recent rapid decline in the price of GE, the current implied volatility for the Mar09 $10 strike price call option has risen to an amazingly high 105. For these reasons, GE stock was acquired today as a timely foundation stock addition to the Covered Calls Advisor Portfolio.


A summary of the transactions is as follows:

Established General Electric Company Covered Calls for Mar09:
02/23/09 Bought 1000 GE @ $8.96
02/23/09 Sold 10 GE Mar09 $10.00 Calls @ $.63

Absolute Return if Unchanged: +7.0%
Annualized Return If Unchanged (ARIU): +98.3%
Absolute Return if Exercised: +18.6%
Annualized Return If Exercised (ARIE): +261.7%
Downside Breakeven Price Point: $8.33
Downside Breakeven Protection: 7.0%

February 2009 Expiration Transactions

The Covered Calls Advisor Portfolio (CCAP) contained a total of 15 positions with February 2009 expirations, with the following results:
- 4 positions (ESRX, HUM, MSFT & POT) closed in-the-money. The calls were exercised and the stock was called away. The roll-up transactions made early in February worked very nicely for both Humana and Potash. The annualized percent return-on-investment(ROI) results were:

Express Scripts(ESRX) -0.1%
Humana(HUM) +148.6%
Microsoft(MSFT) -32.0%
Potash(POT) +119.0%

- 11 positions in the CCAP (MO,AOB,BAC,FLR,HPQ,HD,FXI,EWY,IWN,JCOM, and USO) ended out-of-the-money. Decisions will be made to either sell the equities, or to keep them and sell calls to establish Mar09 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 Express Scripts, Humana, Microsoft and Potash exercised positions are as follows:

1. Express Scripts -- Closed
The Transactions History was as follows:
12/22/08 Initial Stock Purchase Transaction -- Bought 200 ESRX @ $59.86
12/22/08 Inital Calls Sold Transaction -- Sold 2 ESRX Jan09 $60.00 Calls @ $2.90
01/17/09 Jan09 Options Expired
01/22/09 Continuation Transaction -- Sell-to-Open (STO) 2 ESRX Feb09 $55s @ $2.10
Note: The price of ESRX was $52.40 today when the Feb09 options were sold.
02/21/09 Feb09 Options Exercised (200 shares of ESRX called away)
Note: Closing price of ESRX was $56.27 on expiration Friday.


The overall performance results(including commissions) for the ESRX transactions were as follows:
Stock Purchase Cost: $11,980.95
($59.86*200+$8.95 commission)

Net Profit:
(a) Options Income: +$979.10 (200*($2.90+$2.10) - 2*$10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation: -$980.95
= ($55.00-$59.86)*1000 - $8.95 commissions

Total Net Profit: -$1.85
= (+$979.10 +$0.00 -$980.95)

Annualized Return: -0.1%
(-$1.85/$11,980.95)*(365/61 days)


2. Humana Inc. -- Closed
The Transactions History was as follows:
11/24/08 Initial Stock Purchase Transaction -- Bought 1000 HUM @ $25.55
11/24/08 Inital Calls Sold Transaction -- Sold 10 HUM Dec08 $25.00 Calls @ $2.90
Roll-Up-And-Out Spread Transaction:
12/08/08 Buy-to-Close (BTC) 10 HUM Dec08 $25s @ $5.50
12/08/08 Sell-to-Open (STO) 10 HUM Jan09 $30s @ $3.10
Roll-Up Spread Transaction:
12/30/08 Buy-to-Close (BTC) 10 HUM Jan09 $30s @ $5.30
12/30/08 Sell-to-Open (STO) 10 HUM Jan09 $35s @ $1.90
01/17/09 Jan09 Options Expired
01/21/09 Sell-to-Open (STO) 10 HUM Feb09 $35s @ $1.40
Note: Price of HUM was $32.87 when this transaction was executed.
Roll-Up Spread Transaction:
02/02/09 Buy-to-Close (BTC) 10 HUM Feb09 $35s @ $5.48
02/02/09 Sell-to-Open (STO) 10 HUM Feb09 $40s @ $1.88
Note: The price of HUM was $40.02 today when the roll-up transaction was executed.
02/21/09 Feb09 Options Exercised (1000 shares of HUM called away)
Note: Closing price of HUM was $40.54 on expiration Friday.

The overall performance results(including commissions) for the HUM transactions through the Feb09 expiration were as follows:

Stock Purchase Cost: $25,558.95 ($25.55*1,000+$8.95 commission)
Net Profit:
(a) Options Income: -$5,182.25 (1000*($2.90-$5.50+$3.10-$5.30+$1.90+$1.40-$5.48+$1.88) - 5*$16.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation: +$14,441.05 = ($40.00-$25.55)*1000 - $8.95 commissions

Total Net Profit: +$9,258.80
= (-$5,182.25 +$0.00 +$14,441.05)

Annualized Return: +148.6%
(+$9,258.80/$25,558.95)*(365/89 days)

3. Microsoft Corporation -- Closed
The Transactions History was as follows:
08/18/08 Initial Stock Purchase Transaction -- Bought 500 MSFT @ $27.95
08/18/08 Inital Calls Sold Transaction -- Sold 5 MSFT Sep08 $28.00 Calls @ $.81
09/11/08 $55.00 Dividend Received ($.11*500 shares)
09/20/08 Sep08 Options Expired
09/26/08 Covered Calls Continuation Transaction -- STO 5 Oct08 $28.00 Calls @ $.55
10/18/08 Oct08 Options Expired
10/20/08 Sold 5 MSFT Nov08 $22.50 Calls @ $1.75
11/22/08 Nov08 Options Expired
11/24/08 Sold 5 MSFT Dec08 $20 Calls @$.80
12/11/08 $65.00 Dividend Received ($.13*500 shares)
12/20/08 Dec08 Options Expired
12/23/08 Covered Calls Continuation Transaction -- STO 5 Jan09 $21.00 Calls @ $.36
01/17/09 Jan09 Options Expired
01/28/09 Continuation Transaction -- Sell-to-Open (STO) 5 MSFT Feb09 $18s @ $.70
Note: The price of MSFT was $18.10 today when the calls were sold.
02/17/09 $65.00 Ex-Dividend ($.13*500 shares)
02/21/09 Feb09 Options Exercised (500 shares of MSFT called away)
Note: Closing price of MSFT was $18.00 on expiration Friday.

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: +$2,503.80 (500*($.81+$.55+$1.75+$.80+$.36+$.70) - 6*$12.70 commissions)
(b) Dividend Income: +$185.00 ($55.00+$65.00+$65.00)
(c) Capital Appreciation: -$4,983.95
= ($18.00-$27.95)*500 - $8.95 commissions

Total Net Profit(Stock exercised at $18.00): -$2,295.15
= (+$2,503.80 +$185.00 -$4,983.95)

Annualized Return: -32.0%
(-$2,295.15/$13,983.95)*(365/187 days)


4. Potash Corp of Saskatchewan Inc -- Closed
The Transactions History was as follows:
12/22/08 Initial Stock Purchase Transaction -- Bought 200 POT @ $65.84
12/22/08 Inital Calls Sold Transaction -- Sold 2 POT Jan09 $65.00 Calls @ $5.90
Roll-Up Spread Transaction:
01/02/09 Buy-to-Close (BTC) 2 POT Jan09 $65s @ $11.35
01/02/09 Sell-to-Open (STO) 2 POT Jan09 $75s @ $4.35
01/15/09 $20.00 Ex-Dividend ($.10*200 shares)
01/17/09 Jan09 Options Expired
01/22/09 Continuation Transaction -- Sell-to-Open (STO) 2 POT Feb09 $70s @ $7.20
Note: The price of POT was $72.36 today when the calls were sold.
Roll-Up Spread Transaction:
02/04/09 Buy-to-Close (BTC) 2 POT Feb09 $70s @ $10.60
02/04/09 Sell-to-Open (STO) 2 POT Feb09 $80s @ $3.60
Net Debit on Roll Up $7.00 ($10.60-$3.60)
Note: The price of POT was $79.42 today when the spread was transacted.
02/21/09 Feb09 Options Exercised (200 shares of POT called away)
Note: Closing price of POT was $83.96 on expiration Friday.

The overall performance results(including commissions) for the POT transactions through the Feb09 expiration were as follows:

Stock Purchase Cost: $13,176.95
($65.84*200+$8.95 commission)

Net Profit:
(a) Options Income: -$221.80
(200*($5.90-$11.35+$4.35+$7.20-$10.60+$3.60) - 4*$10.45 commissions)
(b) Dividend Income: +$20.00
(c) Capital Appreciation: +$2,823.05
= ($80.00-$65.84)*200 - $8.95 commissions

Total Net Profit: +$2,621.25
= (-$221.80 +$20.00 +$2,823.05)

Annualized Return: +119.0%
(+$2,621.25/$13,176.95)*(365/61 days)

iShares MSCI China ETF -- Continuation Transaction

The following transaction was made to establish a covered calls position against the 700 shares owned in iShares MSCI China ETF (FXI):
02/06/09 Sell-to-Open (STO) 7 FXI Feb09 $30s @ $.50

The transactions history to date is as follows:
12/22/08 Initial Stock Purchase Transaction -- Bought 700 FXI @ $29.23
12/22/08 Initial Calls Sold Transaction -- Sold 7 FXI Jan09 $32.00 Calls @ $.95
01/17/09 Jan09 Options Expired
02/06/09 Continuation Transaction -- Sell-to-Open (STO) 7 FXI Feb09 $30s @ $.50
Note: The price of FXI was $28.33 today when the calls were sold.


The overall performance results(including commissions) for the FXI transactions are as follows:
Stock Purchase Cost: $20,469.95
($29.23*700+$8.95 commission)

Net Profit:
(a) Options Income: +$986.60 (700*($.95+$.50) - 2*$14.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged): -$638.95
= ($28.33-$29.23)*700 - $8.95 commissions
(d) Capital Appreciation (If exercised): +$530.05
= ($30.00-$29.23)*700 - $8.95 commissions

Total Net Profit(If stock price unchanged at $28.33): +$347.65
= (+$986.60 +$0.00 -$638.95)
Total Net Profit(If stock price exercised at $30.00): +$1,516.65
= (+$986.60 +$0.00 +$530.05)

Absolute Return if Unchanged: +1.7%
=+$347.65/$20,469.95
Annualized Return If Unchanged (ARIU): +10.2%
=(+$347.65/$20,469.95)*(365/61 days)

Absolute Return if Exercised: +7.4%
=+$1,516.65/$20,469.95
Annualized Return If Exercised (ARIE) +44.3%
=(+$1,516.65/$20,469.95)*(365/61 days)

Roll Up -- Potash Corp of Saskatchewan Inc.

The Covered Calls Advisor Portfolio (CCAP) covered calls position in Potash Corp of Saskatchewan Inc(POT) was rolled-up today (02/04/09) from the Feb09 $70s to the Feb09 $80s.

The spread transaction was executed as follows:
02/04/09 Buy-to-Close (BTC) 10 POT Feb09 $70s @ $10.60
02/04/09 Sell-to-Open (STO) 10 POT Feb09 $80s @ $3.60
Net Debit on Roll Up $7.00 ($10.60-$3.60)

The ‘net debit to strike price difference ratio’ was 70% [($10.60-$3.60)/($80-$70)]*100, which achieved the Covered Calls Advisor's desired threshold criteria which is to roll up only when this ratio is <76%.

The Transactions History to date is as follows:
12/22/08 Initial Stock Purchase Transaction -- Bought 200 POT @ $65.84
12/22/08 Inital Calls Sold Transaction -- Sold 2 POT Jan09 $65.00 Calls @ $5.90
Roll-Up Spread Transaction:
01/02/09 Buy-to-Close (BTC) 2 POT Jan09 $65s @ $11.35
01/02/09 Sell-to-Open (STO) 2 POT Jan09 $75s @ $4.35
01/15/09 $20.00 Ex-Dividend ($.10*200 shares)
01/17/09 Jan09 Options Expired
01/22/09 Continuation Transaction -- Sell-to-Open (STO) 2 POT Feb09 $70s @ $7.20
Note: The price of POT was $72.36 today when the calls were sold.
Roll-Up Spread Transaction:
02/04/09 Buy-to-Close (BTC) 10 POT Feb09 $70s @ $10.60
02/04/09 Sell-to-Open (STO) 10 POT Feb09 $80s @ $3.60
Net Debit on Roll Up $7.00 ($10.60-$3.60)
Note: The price of POT was $79.42 today when the spread was transacted.

The overall performance results(including commissions) for the POT transactions through the Feb09 expiration would be as follows:

Stock Purchase Cost: $13,176.95
($65.84*200+$8.95 commission)

Net Profit:
(a) Options Income: -$221.80
(200*($5.90-$11.35+$4.35+$7.20-$10.60+$3.60) - 4*$10.45 commissions)
(b) Dividend Income: +$20.00
(c) Capital Appreciation (If exercised): +$2,823.05
= ($80.00-$65.84)*200 - $8.95 commissions

Total Net Profit(If stock price exercised at $80.00): +$2,621.25
= (-$221.80 +$20.00 +$2,823.05)

Absolute Return If Exercised = +19.9%
+$2,621.25/$13,176.95
Annualized Return If Exercised (ARIE) +119.0%
(+$2,621.25/$13,176.95)*(365/61 days)

Roll Up -- j2 Global Communications Inc

The Covered Calls Advisor Portfolio (CCAP) covered calls position in j2 Global Communications Inc(JCOM) was rolled-up today (02/03/09) from the Feb09 $17.5s to the Feb09 $20s.

The spread transaction was executed as follows:
02/03/09 Buy-to-Close (BTC) 3 JCOM Feb09 $17.5s @ $2.76
02/03/09 Sell-to-Open (STO) 3 JCOM Feb09 $20s @ $1.06
Net Debit on Roll Up $1.70 ($2.76-$1.06)

As shown below, a newly developed 'Rolling Analyzer' worksheet has been developed to enable the analysis of any potential covered calls roll-up. The two key criteria analyzed are:
1. ARIU Increase -- 'Annualized Return if Stock Price Unchanged' Increase. That is, what is the difference between the ARIU for the remaining 18 days of the current position compared with the ARIU for the remaining 18 days for the proposed new position? In this case, and as shown on the worksheet below, the difference is +81.5%(118.2%-36.7%). This criterion is a 'Yes' if the difference is >+50.0% which is clearly the case in this instance.
2. The ‘net debit to strike price difference ratio’ is the second criterion presented below. In this case, the ‘net debit to strike price difference ratio’ was 68% [($2.76-$1.06)/($20-$17.5)]*100, which achieves the Covered Calls Advisor's desired threshold criteria; which is to roll up only when this ratio is <76%.


This roll-up spread was entered as a good-til-cancelled limit order with a spread of $1.70. This order was executed today when the price of JCOM stock was at $19.90.

The Transactions History to date for the JCOM covered calls is as follows:
01/23/09 Initial Stock Purchase Transaction -- Bought 300 JCOM @ $16.76
01/23/09 Inital Calls Sold Transaction -- Sold 3 JCOM Feb09 $17.50 Calls @ $1.00
Roll-Up Spread Transaction:
02/03/09 Buy-to-Close (BTC) 3 JCOM Feb09 $17.5s @ $2.76
02/03/09 Sell-to-Open (STO) 3 JCOM Feb09 $20s @ $1.06
Note: The price of JCOM was $19.90 today when this transaction was executed.

The overall performance results(including commissions) for the JCOM transactions through the Feb09 expiration would be as follows:

Stock Purchase Cost: $5,036.95
($16.76*300+$8.95 commission)

Net Profit:
(a) Options Income: -$242.90 (300*($1.00-$2.76+$1.06) - 2*$16.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If exercised): +$963.05 = ($20.00-$16.76)*300 - $8.95 commissions

Total Net Profit(If stock price exercised at $20.00): +$720.15
= (-$242.90 +$0.00 +$963.05)

Absolute Return If Exercised = +14.3%
+$720.15/$5,036.95
Annualized Return If Exercised (ARIE) +179.9%
(+$720.15/$5,036.95)*(365/29 days)

Roll Up -- Humana Inc.

The Covered Calls Advisor Portfolio (CCAP) covered calls position in Humana Inc(HUM) was rolled-up today (02/02/09) from the Feb09 $35s to the Feb09 $40s.

The spread transaction was executed as follows:
02/02/09 Buy-to-Close (BTC) 10 HUM Feb09 $35s @ $5.48
02/02/09 Sell-to-Open (STO) 10 HUM Feb09 $40s @ $1.88
Net Debit on Roll Up $3.60 ($5.48-$1.88)

The ‘net debit to strike price difference ratio’ was 72% [($5.48-$1.88)/($40-$35)]*100, which achieved the Covered Calls Advisor's desired threshold criteria which is to roll up only when this ratio is <75%.

The stock is reacting favorably today to the 4th quarter earnings release. Although 4th quarter EPS was below estimates, revenues exceeded plan and, more importantly, the company maintained its 2009 EPS estimates of $5.90-$6.10. An additional reason for rolling up is the liklihood of ongoing stock price appreciation for HUM in 2009. As a result, the Covered Calls Advisor currently plans to retain the stock for continuing to write covered calls against the Humana stock after the Feb09 expiration. Rolling-up to the $40 strike price increases the likelihood that the HUM stock will be retained at Feb09 expiration thus making it slightly easier to then simply sell a Mar09 call to move the HUM covered calls forward from February to March.

The Transactions History to date is as follows:
11/24/08 Initial Stock Purchase Transaction -- Bought 1000 HUM @ $25.55
11/24/08 Inital Calls Sold Transaction -- Sold 10 HUM Dec08 $25.00 Calls @ $2.90
Roll-Up-And-Out Spread Transaction:
12/08/08 Buy-to-Close (BTC) 10 HUM Dec08 $25s @ $5.50
12/08/08 Sell-to-Open (STO) 10 HUM Jan09 $30s @ $3.10
Roll-Up Spread Transaction:
12/30/08 Buy-to-Close (BTC) 10 HUM Jan09 $30s @ $5.30
12/30/08 Sell-to-Open (STO) 10 HUM Jan09 $35s @ $1.90
01/17/09 Jan09 Options Expired
01/21/09 Sell-to-Open (STO) 10 HUM Feb09 $35s @ $1.40
Note: Price of HUM was $32.87 when this transaction was executed.
Roll-Up Spread Transaction:
02/02/09 Buy-to-Close (BTC) 10 HUM Feb09 $35s @ $5.48
02/02/09 Sell-to-Open (STO) 10 HUM Feb09 $40s @ $1.88
Note: The price of HUM was $40.02 today when the roll-up transaction was executed.

The overall performance results(including commissions) for the HUM transactions through the Feb09 expiration would be as follows:

Stock Purchase Cost: $25,558.95 ($25.55*1,000+$8.95 commission)
Net Profit:
(a) Options Income: -$5,182.25 (1000*($2.90-$5.50+$3.10-$5.30+$1.90+$1.40-$5.48+$1.88) - 5*$16.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If exercised): +$14,441.05 = ($40.00-$25.55)*1000 - $8.95 commissions

Total Net Profit(If stock price exercised at $40.00): +$9,258.80
= (-$5,182.25 +$0.00 +$14,441.05)

Absolute Return If Exercised = +36.2%
+$9,258.80/$25,558.95
Annualized Return If Exercised (ARIE) +148.6%
(+$9,258.80/$25,558.95)*(365/89 days)