Returns -- Through March 2009

The Covered Calls Advisor Portfolio (CCAP) has substantially outperformed the Russell 3000 benchmark so far in 2009. The chart below presents the monthly performance of the CCAP for each month this year and also provides a comparison with the results of the Russell 3000 benchmark.




Let's consider the dramatic difference between the very bearish January and February and the very bullish March:

January and February 2009 -- During the bearish market of January and February, selling call options against our stock holdings provided us covered calls investors with a clear relative advantage over the typical buy-and-hold investors. The relative outperformance of covered calls compared with a buy-and-hold strategy during bearish markets (and also in range-bound markets) is readily understandable because of the additional income received from regularly selling near-month call options.


March Madness 2009 -- This advisor's favorite sport is college basketball; so this is an exciting time of the year for me. This year, March Madness excitement also applies to the bullishness we experienced in the stock market -- the March 2009 overall stock market increase of +7.57% was so explosive that it ranks in the top 3% of historical monthly returns. Those financial advisors who advise clients not to invest in covered calls will often use the rationale that covered calls underperform (compared with a buy-and-hold strategy) during bull market moves. So if their objections are valid, then we would have expected that the very bullish March'09 would very likely have been a month of underperformance for the CCAP relative to its Russell 3000 benchmark. However, the chart above shows that March was actually another month of outperformance for the Covered Calls Advisor Portfolio. The primary reasons for the exceptional performance of the CCAP in March were:

1. Stock Selection -- Just as with buy-and-hold, stock selection is Job #1 with covered calls. Good stock selection overall as well as a significant overweighting of the best-performing sector of the market (information technology) benefitted the portfolio's March performance.
2. Selling Primarily Out-of-the-Money Calls -- After a brutal January and February, it was psychologically difficult to stick with the Covered Call Advisor's current Overall Market Meter rating of 'Slightly Bullish' and the associated covered calls strategy of selling primarily slightly out-of-the-money calls. The natural tendency is to change to a much more conservative deep-in-the-money investing posture after a bearish period, such as that we just experienced in January and February. But a commitment to maintaining the discipline to continue following the Covered Calls Advisor's pre-defined investing process paid off during March. The out-of-the-money positions enabled most stock positions to achieve significant capital appreciation as prices increased toward and sometimes slightly above their Mar09 strike prices.
3. Taking Advantage of High Options Volatility -- The CBOE Volatility Index (VIX) continues to trade at high levels. Consequently, the options income being received currently from selling near-month call options provides an exceptionally large stream of options income for the portfolio.

4. Timely Roll-Ups -- As a result of substantial price appreciation in UnitedHealth Group and BHP Billiton, mid-month roll-up transactions have provided the opportunity to extract incremental profits from these investments.

Granted, merely one month of covered calls outperformance during a very bullish stock market period does not prove anything. Is it possible that the fortuitous results achieved in the four categories above won't be achieved every month?
Of Course!! -- In fact it is unusual that a favorable confluence of all of the four factors described above would occur during the same month. Nevertheless, the March outperformance by CCAP in the face of the strong bullish move does provide encouragement with respect to this advisor's intention of showing that a well-structured, disciplined covered calls strategy can outperform a basic buy-and-hold strategy over a long-term investing horizon.

As a reminder, this Covered Calls Advisor uses a single performance measure 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.

The 2009 Year-to-Date results as well as the Prior Years (2007 & 2008) results are as follows:

1. March 2009 Year-to-Date Results:

CCAP Absolute Return (Jan 1st through Mar 31st, 2009) = +3.07%
($205,864.90-$199,733.10)/$199,733.10

Benchmark Russell 3000(IWV) Absolute Return(Jan 1st through Mar 31st,2009) = -11.77%
($45.88-$52.00)/$52.00

The CCAP has outperformed the Russell 3000 benchmark by a total of 14.84 percentage points (comparing +3.07% with -11.77%) thus far in 2009.

2. Prior Years (2007 & 2008) 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.

Regards and Godspeed,

Jeff

Establish Express Scripts Inc Covered Calls

A new covered call position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of Express Scripts Inc (ESRX) covered calls.

A summary of the transactions is as follows:
Established Express Scripts Inc Covered Calls for Apr09:
03/23/09 Bought 200 ESRX @ $47.05
03/23/09 Sold 2 ESRX Apr09 $50.00 Calls @ $1.40

Absolute Return if Stock Price Unchanged at $47.05: +3.0%
= $1.40/$47.05
Annualized Return if Unchanged(ARIU): +41.7%
Absolute Return if Exercised at $50.00: +9.2%
= [($1.40+($50.00-$47.05)]/$47.05
Annualized Return if Exercised(ARIE): +129.8%
Downside Breakeven Price Point: $45.65
Downside Breakeven Protection: 3.0%

Establish Gymboree Corp Covered Calls

A new covered call position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of Gymboree Corp (GYMB) covered calls.

A summary of the transactions is as follows:
Established Gymboree Corp Covered Calls for Apr09:
03/23/09 Bought 300 GYMB @ $18.07
03/23/09 Sold 3 GYMB Apr09 $20.00 Calls @ $.50

Absolute Return if Stock Price Unchanged at $18.07: +2.8%
= $.50/$18.07
Annualized Return if Unchanged(ARIU): +38.8%
Absolute Return if Exercised at $20.00: +13.4%
= [($.50+($20.00-$18.07)]/$48.95
Annualized Return if Exercised: +188.8%
Downside Breakeven Price Point: $17.57
Downside Breakeven Protection: 2.8%

Establish ENSCO International Inc Covered Calls

A new covered call position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of ENSCO International Inc (ESV) covered calls.

A summary of the transactions is as follows:
Established ENSCO International Inc Covered Calls for Apr09:
03/23/09 Bought 400 ESV @ $29.36
03/23/09 Sold 4 ESV Apr09 $30.00 Calls @ $1.80

Absolute Return if Stock Price Unchanged at $48.95: +6.1%
= $1.80/$29.36
Annualized Return if Unchanged at $29.36 (ARIU): +86.0%
Absolute Return if Exercised at $30.00: +8.3%
= [($1.80+($30.00-$29.36)]/$29.36
Annualized Return if Exercised(ARIE): +116.7%
Downside Breakeven Price Point: $27.56
Downside Breakeven Protection: 6.1%

Establish TeleTec Holdings Inc

A new covered call position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of TeleTec Holdings Inc (TTEC) covered calls.

A summary of the transactions is as follows:
Established TeleTec Holdings Inc Covered Calls for Apr09:
03/23/09 Bought 600 TTEC @ $10.14
03/23/09 Sold 6 TTEC Apr09 $10.00 Calls @ $.64

Absolute Return if Exercised at $10.00: +4.9%
= [$.64-($10.14-$10.00)]/$10.14
Annualized Return if Exercised: +69.0%
Downside Breakeven Price Point: $9.50
Downside Breakeven Protection: 6.3%

Establish Bank of America Covered Calls

A new covered call position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of Bank of America (BAC) covered calls.

A summary of the transactions is as follows:
Established Bank of America Corp Covered Calls for Apr09:
03/23/09 Bought 500 BAC @ $7.16
03/23/09 Sold 5 BAC Apr09 $6.00 Calls @ $1.76

Absolute Return if Exercised at $6.00: +8.4%
= [$1.76-($7.16-$6.00)]/$7.16
Annualized Return if Exercised: +117.1%
Downside Breakeven Price Point: $5.40
Downside Breakeven Protection: 24.6%

Establish Amgen Inc Covered Calls

A new covered call position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of Amgen Inc (AMGN) covered calls.

A summary of the transactions is as follows:
Established Amgen Inc Covered Calls for Apr09:
03/23/09 Bought 300 AMGN @ $48.95
03/23/09 Sold 3 AMGN Apr09 $50.00 Calls @ $1.70

Absolute Return if Stock Price Unchanged at $48.95: +3.5%
= $1.70/$48.95
Annualized Return if Unchanged(ARIU): +48.7%
Absolute Return if Exercised at $50.00: +5.6%
= [($1.70+($50.00-$48.95)]/$48.95
Annualized Return if Exercised: +78.9%
Downside Breakeven Price Point: $47.25
Downside Breakeven Protection: 3.5%

Establish World Fuel Services Corp Covered Calls

A new covered call position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of World Fuel Services Corp (INT) covered calls.

A summary of the transactions is as follows:
Established World Fuel Services Corp Covered Calls for Apr09:
03/23/09 Bought 400 INT @ $31.45
03/23/09 Sold 4 INT Apr09 $30.00 Calls @ $3.00

Absolute Return if Exercised at $30.00: +4.9%
= [$3.00-($31.45-$30.00)]/$31.45
Annualized Return if Exercised: +69.1%
Downside Breakeven Price Point: $28.45
Downside Breakeven Protection: 9.5%

Continuation Transactions -- China Mobile, Fluor, General Electric, Hewlett-Packard, j2 Global Communications, Potash, and Sohu.com

This past Friday was expiration Friday for March. In this Covered Calls Advisor blog's most recent post, it was noted that of the twelve covered calls positions for March 2009, five were exercised and the stock was called away. The remaining seven March09 positions expired out-of-the-money. It was decided to retain the stocks of each of these seven companies (CHL,FLR,GE,HPQ,JCOM,POT, and SOHU) and to establish April09 covered calls for each one. The current fundamental value of each company was reviewed and in each case was deemed worthy to continue to be held in the Covered Calls Advisor Portfolio (CCAP). The transactions history to date and the profit potential for each of these companies is detailed below.

1. China Mobile LTD ADR (CHL) -- Continuation Transaction
The following transaction was made today to establish a covered calls position against the 200 shares owned in China Mobile (CHL):
03/23/09 Sell-to-Open (STO) 2 CHL Apr09 $45s @ $1.35

The Transactions History to date is as follows:
03/13/09 Initial Stock Purchase Transaction -- Bought 200 CHL @ $44.15
03/13/09 Inital Calls Sold Transaction -- Sold 2 CHL Mar09 $45.00 Calls @ $1.00
03/21/09 Mar09 Options Expired
03/23/09 Continuation Transaction -- Sell-to-Open (STO) 2 CHL Apr $45s @ $1.35
Note: The price of CHL was $43.16 today when the call options were sold.

The overall performance results(including commissions) for the CHL transactions are as follows:
Stock Purchase Cost: $8,838.95
($44.15*200+$8.95 commission)

Net Profit:
(a) Options Income: +$449.10 (200*($1.00+$1.35) - 2*$10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $43.16): -$206.95
= ($43.16-$44.15)*200 - $8.95 commissions
(c) Capital Appreciation (If exercised at $45.00): +$161.05
= ($45.00-$44.15)*200 - $8.95 commissions

Total Net Profit(If stock price unchanged at $43.16): +$242.15
= (+$449.10 +$0.00 -$206.95)
Total Net Profit(If stock price exercised at $45.00): +$610.15
= (+$449.10 +$0.00 +$161.05)

Absolute Return if Stock Price Unchanged at $43.16: +2.7%
= +$242.15/$8,838.95
Annualized Return If Stock Price Unchanged (ARIU) +27.8%
(+$242.15/$8,838.95)*(365/36 days)

Absolute Return if Exercised at $45.00: +6.9%
= +$610.15/$8,838.95
Annualized Return If Exercised (ARIE) +70.0%
(+$610.15/$8,838.95)*(365/36 days)


2. Fluor Corp (FLR) -- Continuation Transaction
The following transaction was made today to establish a covered calls position against the 600 shares owned in Fluor Corp(FLR):
03/23/09 Sell-to-Open (STO) 6 FLR Apr09 $40s @ $1.45

The transactions history to date is as follows:
11/24/08 Initial Stock Purchase Transaction -- Bought 600 FLR @ $35.35
11/24/08 Initial Calls Sold Transaction -- Sold 6 FLR Dec08 $35 Calls @ $3.50
12/03/08 Ex-Dividend of $75.00 ($.125*600 shares)
12/05/08 Roll-Up-And-Out Transaction:
Bought to Close 6 FLR Dec08 $35 Calls @ $10.10
Sold to Open 6 FLR Jan09 $45 Calls @ $5.30
01/17/09 Jan09 Options Expired
01/28/09 Continuation Transaction -- Sell-to-Open (STO) 6 FLR Feb09 $45s @ $2.10
Note: The price of FLR was $43.35 when the calls were sold.
02/21/09 Feb09 Options Expired
03/04/09 Ex-Dividend of $75.00 ($.125*600 shares)
03/09/09 Sell-to-Open (STO) 6 FLR Mar09 $40s @ $.65
Note: The price of FLR was $37.04 today when the calls were sold.
03/21/09 Mar09 Options Expired
03/23/09 Continuation Transaction -- Sell-to-Open (STO) 6 FLR Apr $40s @ $1.45
Note: The price of FLR was $37.05 today when the call options were sold.

The overall performance results(including commissions) for the FLR transactions are as follows:
Stock Purchase Cost: $21,218.95
($35.35*600+$8.95 commission)

Net Profit:
(a) Options Income: +$1,672.75 (600*($3.50-$10.10+$5.30+$2.10+$.65+$1.45) - 5*$13.45 commissions)
(b) Dividend Income: +$150.00 ($.125*600 shares)* 2 distributions
(c) Capital Appreciation (If stock price unchanged at $37.05): +$1,011.05
= ($37.05-$35.35)*600 - $8.95 commissions
(c) Capital Appreciation (If exercised at $40.00): +$2,781.05
= ($40.00-$35.35)*600 - $8.95 commissions

Total Net Profit(If stock price unchanged at $37.05): +$2,833.80
= (+$1,672.75 +$150.00 +$1,011.05)
Total Net Profit(If stock price exercised at $40.00): +$4,603.80
= (+$1,672.75 +$150.00 +$2,781.05)

Absolute Return if Unchanged at $37.05: +13.4%
= +$2,833.80/$21,218.95
Annualized Return If Unchanged (ARIU): +33.6%
= (+$2,833.80/$21,218.95)*(365/145 days)

Absolute Return if Exercised at $40.00: +21.7%
= +$4,603.80/$21,218.95
Annualized Return If Exercised (ARIE) +54.6%
(+$4,603.80/$21,218.95)*(365/145 days)


3. General Electric (GE) -- Continuation Transaction
The following transaction was made today to establish a covered calls position against the 1000 shares owned in General Electric (GE):
03/23/09 Sell-to-Open (STO) 10 GE Apr09 $10s @ $.99

The Transactions History to date is as follows:
02/23/09 Initial Stock Purchase Transaction -- Bought 1000 GE @ $8.96
02/23/09 Inital Calls Sold Transaction -- Sold 10 GE Mar09 $10.00 Calls @ $.63
03/21/09 Mar09 Options Expired
03/23/09 Continuation Transaction -- Sell-to-Open (STO) 10 GE Apr $10s @ $.99
Note: The price of GE was $10.09 today when the call options were sold.

The overall performance results(including commissions) for the GE transactions are as follows:
Stock Purchase Cost: $8,968.95
($8.96*1000+$8.95 commission)

Net Profit:
(a) Options Income: +$1,587.10
= (1000*($.63+$.99) - 2*$16.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If exercised at $10.00): +$1,031.05
= ($10.00-$8.96)*1000 - $8.95 commissions

Total Net Profit(If stock price exercised at $10.00): +$2,618.15
= (+$1,587.10 +$0.00 +$1,031.05)

Absolute Return if Exercised at $10.00: +29.2%
= +$2,618.15/$8,968.95
Annualized Return If Exercised (ARIE) +197.3%
(+$2,618.15/$8,968.95)*(365/54 days)


4. Hewlett-Packard Company (HPQ) -- Continuation Transaction
The following transaction was made today to establish a covered calls position against the 600 shares owned in Hewlett-Packard Company (HPQ):
03/23/09 Sell-to-Open (STO) 6 HPQ Apr09 $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
03/09/09 $48.00 Ex-dividend ($.08 * 600 shares)
03/21/09 Mar09 Options Expired
03/23/09 Continuation Transaction -- Sell-to-Open (STO) 6 HPQ Apr $32.50s @ $.55
Note: The price of HPQ was $30.24 today when the call options were sold.

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: +$861.90 = (300*$.80 + 600*($.55 +$.55) - $38.10 commissions)
(b) Dividend Income: +$48.00
(c) Capital Appreciation (If stock price unchanged at $30.24): -$968.95
= [$30.24-$31.84(avg cost basis)]*600 - $8.95 commissions
(c) Capital Appreciation (If exercised at $32.50): +$387.05
= [$32.50-$31.84(avg cost basis)]*600 - $8.95 commissions

Total Net Profit(If stock price unchanged at $30.24): -$59.05
= (+$861.90 +$48.00 -$968.95)
Total Net Profit(If stock price exercised at $32.50): +$1,296.95
= (+$861.90 +$48.00 +$387.05)

Absolute Return if Stock Price Unchanged at $30.24: -0.3%
=-$59.05/$19,121.90
Annualized Return If Unchanged (ARIU): -1.6%
=(-$59.05/$19,121.90)*(365/(88+52)/2 days)

Absolute Return if Exercised at $32.50: +6.8%
=+$1,296.95/$19,121.90
Annualized Return If Exercised (ARIE) +35.4%
=(+$1,296.95/$19,121.90)*(365/(88+52)/2 days)


5. j2 Global Communications Inc (JCOM) -- Continuation Transaction
The following transaction was made to establish a covered calls position against the 300 shares owned in j2 Global Communications Inc (JCOM):
03/23/09 Sell-to-Open (STO) 3 JCOM Apr09 $20s @ $.90

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.
03/21/09 Mar09 Options Expired
03/23/09 Continuation Transaction -- Sell-to-Open (STO) 3 JCOM Apr $20s @ $.90
Note: The price of JCOM was $19.75 today when the call options were sold.

The overall performance results(including commissions) for the JCOM transactions through the Apr09 expiration would be as follows:
Stock Purchase Cost: $5,036.95
($16.76*300+$8.95 commission)

Net Profit:
(a) Options Income: +$240.20 (300*($1.00-$2.76+$1.06+$.75+$.90) - 4*$11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If unchanged at $19.75): +$888.05
= ($19.75-$16.76)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised at $20.00): +$963.05
= ($20.00-$16.76)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $19.75): +$1,128.25
= (+$240.20 +$0.00 +$888.05)
Total Net Profit(If stock price exercised at $20.00): +$1,203.25
= (+$240.20 +$0.00 +$963.05)

Absolute Return (If Stock Price Unchanged at $19.75) = +22.4%
= +$1,128.25/$5,036.95
Annualized Return If Unchanged (ARIU) +96.2%
= (+$1,128.25/$5,036.95)*(365/85 days)

Absolute Return If Exercised at $20.00 = +23.9%
+$1,203.25/$5,036.95
Annualized Return If Exercised (ARIE) +102.6%
(+$1,203.25/$5,036.95)*(365/85 days)


6. Potash Corp of Saskatchewan Inc (POT) -- Continuation Transaction
The following transaction was made today to establish a covered calls position against the 100 shares owned in Potash Corp (POT):
03/23/09 Sell-to-Open (STO) 1 POT Apr09 $80s @ $6.00

The Transactions History to date is as follows:
03/02/09 Initial Stock Purchase Transaction -- Bought 100 POT @ $79.078
03/02/09 Inital Calls Sold Transaction -- Sold 1 POT Mar09 $80.00 Call @ $6.30
03/21/09 Mar09 Options Expired
03/23/09 Continuation Transaction -- Sell-to-Open (STO) 1 POT Apr $80s @ $6.00
Note: The price of POT was $79.85 today when the call option was sold.

The overall performance results(including commissions) for the POT transactions are as follows:
Stock Purchase Cost: $7,916.75
($79.078*100+$8.95 commission)

Net Profit:
(a) Options Income: +$1,210.60 (100*($6.30+$6.00) - 2*$9.70 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $79.85): +$68.25
= ($79.85-$79.078)*100 - $8.95 commissions
(c) Capital Appreciation (If exercised at $80.00): +$83.25
= ($80.00-$79.078)*100 - $8.95 commissions

Total Net Profit(If stock price unchanged at $79.85): +$1,278.85
= (+$1,210.60 +$0.00 +$68.25)
Total Net Profit(If stock price exercised at $80.00): +$1,293.85
= (+$1,210.60 +$0.00 +$83.25)

Absolute Return if Stock Price Unchanged at $79.85: +16.2%
= +$1,278.85/$7,916.75
Annualized Return If Stock Price Unchanged (ARIU) +125.4%
(+$1,278.85/$7,916.75)*(365/47 days)

Absolute Return if Exercised at $80.00: +16.3%
= +$1,293.85/$7,916.75
Annualized Return If Exercised (ARIE) +126.9%
(+$1,293.85/$7,916.75)*(365/47 days)


7. Sohu.com Inc (SOHU) -- Continuation Transaction
The following transaction was made today to establish a covered calls position against the 400 shares owned in Sohu.com Inc (SOHU):
03/23/09 Sell-to-Open (STO) 4 SOHU Apr09 $45s @ $1.45

The Transactions History to date is as follows:
02/24/09 Bought 400 SOHU @ $44.617
02/24/09 Sold 4 SOHU Mar09 $45.00 Calls @ $3.20
03/21/09 Mar09 Options Expired
03/23/09 Continuation Transaction -- Sell-to-Open (STO) 4 SOHU Apr $45s @ $1.45
Note: The price of SOHU was $40.10 today when the call options were sold.

The overall performance results(including commissions) for the SOHU transactions are as follows:
Stock Purchase Cost: $17,855.75
($44.617*400+$8.95 commission)

Net Profit:
(a) Options Income: +$1,839.10 (400*($3.20+$1.45) - 2*$10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $40.10): -$1,815.75
= ($40.10-$44.617)*400 - $8.95 commissions
(c) Capital Appreciation (If exercised at $45.00): +$144.25
= ($45.00-$44.617)*400 - $8.95 commissions

Total Net Profit(If stock price unchanged at $40.10): +$23.35
= (+$1,839.10 +$0.00 -$1,815.75)
Total Net Profit(If stock price exercised at $45.00): +$1,983.35
= (+$1,839.10 +$0.00 +$144.25)

Absolute Return if Stock Price Unchanged at $40.10: +0.1%
= +$23.35/$17,855.75
Annualized Return If Stock Price Unchanged (ARIU) +0.9%
(+$23.35/$17,855.75)*(365/53 days)

Absolute Return if Exercised at $45.00: +6.9%
= +$1,983.35/$17,855.75
Annualized Return If Exercised (ARIE) +76.5%
(+$1,983.35/$17,855.75)*(365/53 days)

March 2009 Expiration Transactions

The Covered Calls Advisor Portfolio (CCAP) contained a total of 12 positions with March 2009 expirations, with the following results:
- 5 positions (MO,BAC,EWY,IWN, and USO) closed in-the-money. The calls were exercised and the stock was called away. The annualized percent return-on-investment(ROI) results were:

Altria Group Inc(MO): -8.2%
Bank of America Corp(BAC): +55.3%
iShares MSCI South Korea ETF(EWY): +2.4%
iShares Russell 2000 Value ETF(IWN): -48.9%
United States Oil Fund ETF(USO) +13.3%

- 7 positions in the CCAP (CHL,FLR,GE,HPQ,JCOM,POT, and SOHU) ended out-of-the-money. Decisions will be made to either sell the equities, or to keep them and sell calls to establish Apr09 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 Altria, Bank of America, South Korea ETF, Russell 2000 Value ETF, and the U.S. Oil Fund ETF exercised positions are as follows:

1. Altria Group Inc (MO) -- Closed
The Transactions History was 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
09/11/08 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
11/22/08 Nov08 Options Expired
11/24/08 Covered Calls Continuation Transaction -- Sold 5 MO Dec08 $16 Calls at $.63
12/19/08 Dec08 Options Expired
12/22/08 Ex-Dividend of $160.00 ($.32 * 500 shares)
12/22/08 Covered Calls Continuation Transaction -- Sold 5 MO Jan09 $17 Calls at $.32
01/17/09 Jan09 Options Expired
01/20/09 Covered Calls Continuation Transaction -- Sold 5 MO Feb09 $18 Calls at $.40
02/21/09 Feb09 Options Expired
03/05/09 03/05/09 Covered Calls Continuation Transaction -- STO 5 Mar09 $16.00 Calls @ $.21
03/12/09 Ex-Dividend of $160.00 ($.32 * 500 shares)
03/21/09 Mar09 Options Exercised (500 shares of MO called away)
Note: Closing price of MO was $16.78 on expiration Friday.

The overall performance results(including commissions) for the MO transactions were as follows:
Stock Purchase Cost: $10,463.95
($20.91*500+$8.95 commission)

Net Profit:
(a) Options Income: +$1,496.10 (500*($.51+$.43+$.67+$.63+$.32+$.40+$.21) - 7*$12.70 commissions)
(b) Dividend Income: +$465.00 ($145.00+$160.00+$160.00)
(c) Capital Appreciation: -$2,463.95
= ($16.00-$20.91)*500 - $8.95 commissions

Total Net Profit(Stock exercised at $16.00): -$502.85
= (+$1,496.10 +$465.00 -$2,463.95)

Absolute Return: -4.8%
=-$502.85/$10,463.95
Annualized Return: -8.2%
(-$502.85/$10,463.95)*(365/214 days)

2. Bank of America Corp (BAC) -- Closed
The Transactions History was 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 when the calls were sold.
03/21/09 Mar09 Options Exercised (500 shares of BAC called away)
Note: Closing price of BAC was $6.19 on expiration Friday.

The overall performance results(including commissions) for the BAC transactions were 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: -$973.45
= ($6.00-$7.929)*500 - $8.95 commissions

Total Net Profit (Stock exercised at $6.00): +$391.15
= (+$1,364.60 +$0.00 -$973.45)

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


3. iShares MSCI South Korea ETF (EWY) -- Closed
The Transactions History was as follows:
12/22/08 Initial Stock Purchase Transaction -- Bought 600 EWY @ $28.50
12/22/08 Inital Calls Sold Transaction -- Sold 6 EWY Jan09 $30.00 Calls @ $1.10
01/17/09 Jan09 Options Expired
01/22/09 Continuation Transaction -- Sell-to-Open (STO) 6 EWY Feb09 $28s @ $1.00
Note: The price of EWY was $25.45 today when the Feb09 options were sold.
02/21/09 Feb09 Options Expired
03/16/09 Sell-to-Open (STO) 6 EWY Mar09 $26s @ $.65
Note: The price of EWY was $25.88 today when the calls were sold.
03/21/09 Mar09 Options Exercised (600 shares of EWY called away)
Note: Closing price of EWY was $26.77 on expiration Friday.

The overall performance results(including commissions) for the EWY transactions were as follows:
Stock Purchase Cost: $17,108.95
($28.50*600+$8.95 commission)

Net Profit:
(a) Options Income: +$1,609.65 (600*($1.10+$1.00+$.65) - 3*$13.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation: -$1,508.95
= ($26.00-$28.50)*600 - $8.95 commissions

Total Net Profit(Stock price exercised at $26.00): +$100.70
= (+$1,609.65 +$0.00 -$1,508.95)

Absolute Return: +0.6%
+$100.70/$17,108.95
Annualized Return: +2.4%
(+$100.70/$17,108.95)*(365/89 days)


4. iShares MSCI Russell 2000 Value ETF (IWN) -- Closed
The transactions history was as follows:
01/21/09 Initial Stock Purchase Transaction -- Bought 300 IWN @ $42.56
01/21/09 Initial Calls Sold Transaction -- Sold 3 IWN Feb09 $45.00 Calls @ $1.60
02/21/09 Feb09 Options Expired
03/12/09 Sell-to-Open (STO) 3 IWN Mar09 $37s @ $.70
Note: The price of IWN was $36.20 today when the calls were sold.
03/21/09 Mar09 Options Exercised (300 shares of IWN called away)
Note: Closing price of IWN was $37.53 on expiration Friday.

The overall performance results(including commissions) for the IWN transactions are as follows:
Stock Purchase Cost: $12,776.95
($42.56*300+$8.95 commission)

Net Profit:
(a) Options Income: +$667.60 (300*($1.60+$.70) - 2*$11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation: -$1,676.95
= ($37.00-$42.56)*300 - $8.95 commissions

Total Net Profit(Stock price exercised at $37.00): -$1,009.35
= (+$667.60 +$0.00 -$1,676.95)

Absolute Return: -7.9%
-$1,009.35/$12,776.95
Annualized Return: -48.9%
(-$1,009.35/$12,776.95)*(365/59 days)

5. United States Oil Fund ETF (USO) -- Closed
The transactions history was 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.
03/21/09 Mar09 Options Exercised (200 shares of USO called away)
Note: Closing price of USO was $30.76 on expiration Friday.

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: -$874.95
= ($28.00-$32.33)*200 - $8.95 commissions

Total Net Profit(Stock price exercised at $28.00): +$143.70
= (+$1,018.65 +$0.00 -$874.95)

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

Roll-Up-and-Forward -- UnitedHealth Group Inc

The Covered Calls Advisor Portfolio (CCAP) covered calls position in UnitedHealth Group Inc(UNH) was rolled-up-and-forward today (03/19/09) from the Mar09 $19.00s to the Apr09 $22.00s.

The spread transaction was executed as follows:
03/19/09 Buy-to-Close (BTC) 3 UNH Mar09 $19.00s @ $3.05
03/19/09 Sell-to-Open (STO) 3 UNH Apr09 $45s @ $1.75
Net Debit on Roll Up $1.30 ($3.05-$1.75)
This roll-up option spread was entered as a good-til-cancelled limit order with a spread of $1.30. The order was executed today when the price of UNH stock was at $21.88.

The Transactions History to date for the UNH covered calls is as follows:
03/10/09 Bought 300 UNH @ $18.96
03/10/09 Sold 3 UNH Mar09 $19.00 Calls @ $1.20
03/19/09 Buy-to-Close (BTC) 3 UNH Mar09 $19.00s @ $3.05
03/19/09 Sell-to-Open (STO) 3 UNH Apr09 $45s @ $1.75
Net Debit on Roll Up $1.30 ($3.05-$1.75)
03/31/09 $9.00 Ex-Dividend ($.03*300 shares)

The overall performance results(including commissions) for the UNH transactions through the Apr09 expiration would be as follows:

Stock Purchase Cost: $5,696.95
($18.96*300+$8.95 commission)

Net Profit:
(a) Options Income: -$52.40 (300*($1.20-$3.05+$1.75) - 2*$11.20 commissions)
(b) Dividend Income: +$9.00
(c) Capital Appreciation (If stock price unchanged at $21.88): +$867.05
= ($21.88-$18.96)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised at $22.00): +$903.05
= ($22.00-$18.96)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $21.88): +$823.65
= (-$52.40 +$9.00 +$867.05)
Total Net Profit(If stock price exercised at $22.00): +$859.65
= (-$52.40 +$9.00 +$903.05)

Absolute Return If Stock Price Unchanged at $21.88 (ARIU) = +14.5%
+$823.65/$5,696.95
Annualized Return If Unchanged (ARIU) +135.3%
(+$823.65/$5,696.95)*(365/39 days)
Absolute Return If Exercised = +15.1%
+$859.65/$5,696.95
Annualized Return If Exercised (ARIE) +141.2%
(+$859.65/$5,696.95)*(365/39 days)

Roll-Up-and-Forward -- BHP Billiton LTD ADR

The Covered Calls Advisor Portfolio (CCAP) covered calls position in BHP Billiton LTD ADR(BHP) was rolled-up-and-forward today (03/19/09) from the Mar09 $37.50s to the Apr09 $45s.

The spread transaction was executed as follows:
03/19/09 Buy-to-Close (BTC) 1 BHP Mar09 $37.50s @ $7.50
03/19/09 Sell-to-Open (STO) 1 BHP Apr09 $45s @ $3.10
Net Debit on Roll Up $4.40 ($7.50-$3.10)

As shown below, the 'Roll-Up Analyzer' worksheet was used to evaluate the desirability of the potential roll-up transaction. The two key criteria analyzed are:
1. Roll-Up Strike Price Percent Change -- The Covered Calls Advisor's criteria here is that the roll-up strike price percent change should be greater than 10%. In this instance, the actual percentage is 20.0% so this criteria is achieved.
2. The second criteria is termed as 'Current Price Near ATM' on the spreadsheet below. Here, a comparison is made between two annualized returns. The annualized return if the stock price is unchanged (ARIU) for the possible new covered calls position is compared with the ARIU for the remaining 2 days for the existing position. If the new position has an annualized return potential that is more than 35% more than the current position, then switching to the new position is a 'Yes'. In this case, as shown on the worksheet below, the difference is +43.4%(84.0%-40.6%), so a roll-up is desirable in this instance.

Now, a decision needs to be made whether to roll-up within the same expiration month or whether to roll-forward to the next expiration month. According to the Covered Calls Advisor's criteria, if there is less than 1 week remaining until the current position's expiration, then the roll-up will be done to the next expiration month; which is true in this instance since there are currently only 2 days remaining until Mar09 expiration.



This roll-up option spread was entered as a good-til-cancelled limit order with a spread of $4.10. The order was executed today when the price of BHP stock was at $44.90.


The Transactions History to date for the BHP covered call is as follows:
02/25/09 Bought 100 BHP @ $36.75
02/25/09 Sold 1 BHP Mar09 $37.50 Call @ $2.90
03/19/09 Buy-to-Close (BTC) 1 BHP Mar09 $37.50s @ $7.50
03/19/09 Sell-to-Open (STO) 1 BHP Apr09 $45s @ $3.10
Note: The price of BHP was $44.90 today when this transaction was executed.

The overall performance results(including commissions) for the BHP transactions through the Apr09 expiration would be as follows:

Stock Purchase Cost: $3,683.95
($36.75*100+$8.95 commission)

Net Profit:
(a) Options Income: -$169.40 (100*($2.90-$7.50+$3.10) - 2*$9.70 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $44.90): +$806.05
= ($44.90-$36.75)*100 - $8.95 commissions
(c) Capital Appreciation (If exercised at $45.00): +$816.05
= ($45.00-$36.75)*100 - $8.95 commissions

Total Net Profit(If stock price unchanged at $44.90): +$636.65
= (-$169.40 +$0.00 +$806.05)
Total Net Profit(If stock price exercised at $45.00): +$646.65
= (-$169.40 +$0.00 +$816.05)

Absolute Return If Stock Price Unchanged at $44.90 (ARIU) = +17.3%
+$636.65/$3,683.95
Annualized Return If Unchanged (ARIU) +121.3%
(+$636.65/$3,683.95)*(365/52 days)
Absolute Return If Exercised = +17.6%
+$646.65/$3,683.95
Annualized Return If Exercised (ARIE) +123.2%
(+$646.65/$3,683.95)*(365/52 days)

iShares MSCI South Korea Index ETF -- Continuation Transaction

The following transaction was made today to establish a covered calls position against the 600 shares owned in iShares MSCI South Korea Index ETF (EWY):
03/16/09 Sell-to-Open (STO) 6 EWY Mar09 $26s @ $.65

The Transactions History to date is as follows:
12/22/08 Initial Stock Purchase Transaction -- Bought 600 EWY @ $28.50
12/22/08 Inital Calls Sold Transaction -- Sold 6 EWY Jan09 $30.00 Calls @ $1.10
01/17/09 Jan09 Options Expired
01/22/09 Continuation Transaction -- Sell-to-Open (STO) 6 EWY Feb09 $28s @ $1.00
Note: The price of EWY was $25.45 today when the Feb09 options were sold.
02/21/09 Feb09 Options Expired
03/16/09 Sell-to-Open (STO) 6 EWY Mar09 $26s @ $.65
Note: The price of EWY was $25.88 today when the calls were sold.

The overall performance results(including commissions) for the EWY transactions are as follows:
Stock Purchase Cost: $17,108.95
($28.50*600+$8.95 commission)

Net Profit:
(a) Options Income: +$1,609.65 (600*($1.10+$1.00+$.65) - 3*$13.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $25.88): -$1,580.95
= ($25.88-$28.50)*600 - $8.95 commissions
(c) Capital Appreciation (If exercised): -$1,508.95
= ($26.00-$28.50)*600 - $8.95 commissions

Total Net Profit(If stock price unchanged at $25.88): +$28.70
= (+$1,609.65 +$0.00 -$1,580.95)

Total Net Profit(If stock price exercised at $26.00): +$100.70
= (+$1,609.65 +$0.00 -$1,508.95)

Absolute Return if Unchanged: +0.2%
Annualized Return If Stock Price Unchanged (ARIU) +0.7%
(+$28.70/$17,108.95)*(365/89 days)

Absolute Return if Exercised: +0.6%
Annualized Return If Exercised (ARIE) +2.4%
(+$100.70/$17,108.95)*(365/89 days)

Establish China Mobile LTD ADR Covered Calls

A new covered call position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of China Mobile LTD ADR (CHL) covered calls.

China Mobile is the one of the world's largest companies with a current market capitaliziation of $178.3 billion. It is by far the world's largest mobile telecommunications service provider with 464 million subscribers in China. To put this statistic in perspective, this is approximately three times the total number of wireless subscribers of both Verizon Wireless and AT&T combined. Yet at it's current price, CHL is very attractively valued. On the Covered Calls Advisor's 'Buy Alerts' worksheet, CHL rated a perfect 9-out-of-9 which is a very unusual occurrence. The current CHL options implied volatility is very high and part of this is attributable to the fact that the next earnings release is coming up on March 19th. Despite the uncertainty associated with this earnings release, for this advisor, the high potential covered calls investment returns (see below) are more than sufficient to justify the investment risk in CHL.


A summary of the transactions is as follows:

Established China Mobile LTD ADR Covered Calls for Mar09:
03/13/09 Bought 200 CHL @ $44.15
03/13/09 Sold 2 CHL Mar09 $45.00 Calls @ $1.00

Absolute Return if Unchanged: +2.3%
Annualized Return If Unchanged (ARIU): +103.3%
Absolute Return if Exercised: +4.2%
Annualized Return If Exercised (ARIE): +191.2%
Downside Breakeven Price Point: $43.15
Downside Breakeven Protection: 2.3%

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):
03/13/09 Sell-to-Open (STO) 7 FXI Apr09 $30s @ $.60

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.
02/21/09 Feb09 Options Expired
03/13/09 Sell-to-Open (STO) 7 FXI Apr09 $30s @ $.60
Note: The price of FXI was $26.40 today when the calls were sold.

Despite the price decline since this China ETF was originally purchased last December, the Covered Calls Advisor continues to be bullish on China. Consequently, the Apr09 $30 strike price was chosen which is substantially (13.6%) out-of-the-money. This allows for a substantial price increase in FXI before the call options would be exercised.

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: +$1,392.40 (700*($.95+$.50+$.60) - 3*$14.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged): -$1,989.95
= ($26.40-$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 $26.40): -$597.55
= (+$1,392.40 +$0.00 -$1,989.95)
Total Net Profit(If stock price exercised at $30.00): +$1,922.45
= (+$1,392.40 +$0.00 +$530.05)

Absolute Return if Unchanged: -2.9%
Annualized Return If Unchanged (ARIU): -9.1%
(-$597.55/$20,469.95)*(365/117 days)

Absolute Return if Exercised: +9.4%
Annualized Return If Exercised (ARIE) +29.3%
(+$1,922.45/$20,469.95)*(365/117 days)

iShares Russell 2000 Value Index ETF -- Continuation Transaction

The following transaction was made to establish a covered calls position against the 300 shares owned in iShares Russell 2000 Value Index ETF (IWN):
03/12/09 Sell-to-Open (STO) 3 IWN Mar09 $37s @ $.70

The transactions history to date is as follows:
01/21/09 Initial Stock Purchase Transaction -- Bought 300 IWN @ $42.56
01/21/09 Initial Calls Sold Transaction -- Sold 3 IWN Feb09 $45.00 Calls @ $1.60
02/21/09 Feb09 Options Expired
03/12/09 Sell-to-Open (STO) 3 IWN Mar09 $37s @ $.70
Note: The price of IWN was $36.20 today when the calls were sold.

The overall performance results(including commissions) for the IWN transactions are as follows:
Stock Purchase Cost: $12,776.95
($42.56*300+$8.95 commission)

Net Profit:
(a) Options Income: +$667.60 (300*($1.60+$.70) - 2*$11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged): -$1,916.95
= ($36.20-$42.56)*300 - $8.95 commissions
(d) Capital Appreciation (If exercised): -$1,676.95
= ($37.00-$42.56)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $36.20): -$1,249.35
= (+$667.60 +$0.00 -$1,916.95)
Total Net Profit(If stock price exercised at $37.00): -$1,009.35
= (+$667.60 +$0.00 -$1,676.95)

Absolute Return if Unchanged: -9.8%
Annualized Return If Unchanged (ARIU): -60.5%
(-$1,249.35/$12,776.95)*(365/59 days)

Absolute Return if Exercised: -7.9%
Annualized Return If Exercised (ARIE) -48.9%
(-$1,009.35/$12,776.95)*(365/59 days)

Establish UnitedHealth Group Inc Covered Calls

A new covered call position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of UnitedHealth Group Inc(UNH) covered calls.

UNH is a very large U.S. managed healthcare company. It is rated a 'Buy' by each of the investment advisory services preferred by the Covered Calls Advisor, namely Schwab Equity Ratings and MarketGrader.com. The large call option premiums now available for UNH are indicative of the present large degree of uncertainty in all managed-care companies. This uncertainty is a direct result of the Obama Administration's stated commitment to reducing healthcare costs for Americans. In this vein, it is presumed that a substantial reduction in government reimbursments to these companies are forthcoming. It is this advisor's opinion that the recent huge sell-off in this group of companies has been overdone. Although future reimbursment levels will indeed be highly scrutinized by the Federal government, the profit margins of these companies are already relatively modest. Importantly, UNH and other health insurers will likely have an expanding role in the administration's objective of expanding healthcare coverage both in terms of the number of Americans covered as well as the extent of conditions covered. This covered calls investment in UNH is similar to other recent newly established positions in the Covered Calls Advisor Portfolio (such as POT,BHP,GE,and HD) in that these are high-quality, 'foundation' companies in the sense that each is a leader in their respective industry. Their stocks are especially attractive investments now since their prices have been beaten down to excessively low valuations. For each of these companies, a strong case can be made that their stock prices are likely to double(or more) within the next two years. Consequently, they qualify as the types of companies that can be bought now and retained for writing calls each month over the next several months.

A summary of the transactions is as follows:

Established UnitedHealth Group Inc Covered Calls for Mar09:
03/10/09 Bought 300 UNH @ $18.96
03/10/09 Sold 3 UNH Mar09 $19.00 Calls @ $1.20

Absolute Return if Unchanged: +6.3%
Annualized Return If Unchanged (ARIU): +209.6%
Absolute Return if Exercised: +6.5%
Annualized Return If Exercised (ARIE): +217.0%
Downside Breakeven Price Point: $17.76
Downside Breakeven Protection: 6.3%

Fluor Corporation -- Continuation Transaction

The following transaction was made to establish a covered calls position against the 600 shares owned in Fluor Corporation (FLR):
03/09/09 Sell-to-Open (STO) 6 FLR Mar09 $40s @ $.65

The transactions history to date is as follows:
11/24/08 Initial Stock Purchase Transaction -- Bought 600 FLR @ $35.35
11/24/08 Initial Calls Sold Transaction -- Sold 6 FLR Dec08 $35 Calls @ $3.50
12/03/08 Ex-Dividend of $75.00 ($.125*600 shares)
12/05/08 Roll-Up-And-Out Transaction:
Bought to Close 6 FLR Dec08 $35 Calls @ $10.10
Sold to Open 6 FLR Jan09 $45 Calls @ $5.30
01/17/09 Jan09 Options Expired
01/28/09 Continuation Transaction -- Sell-to-Open (STO) 6 FLR Feb09 $45s @ $2.10
Note: The price of FLR was $43.35 when the calls were sold.
02/21/09 Feb09 Options Expired
03/04/09 Ex-Dividend of $75.00 ($.125*600 shares)
03/09/09 Sell-to-Open (STO) 6 FLR Mar09 $40s @ $.65
Note: The price of FLR was $37.04 today when the calls were sold.

The overall performance results(including commissions) for the FLR transactions are as follows:
Stock Purchase Cost: $21,218.95
($35.35*600+$8.95 commission)

Net Profit:
(a) Options Income: +$816.20 (600*($3.50-$10.10+$5.30+$2.10+$.65) - 4*$13.45 commissions)
(b) Dividend Income: +$150.00 ($.125*600 shares)* 2 distributions
(c) Capital Appreciation (If stock price unchanged): +$1,005.05
= ($37.04-$35.35)*600 - $8.95 commissions
(d) Capital Appreciation (If exercised): +$2,781.05
= ($40.00-$35.35)*600 - $8.95 commissions

Total Net Profit(If stock price unchanged at $37.04): +$1,971.25
= (+816.20 +$150.00 +$1,005.05)
Total Net Profit(If stock price exercised at $40.00): +$3,747.25
= (+$816.20 +$150.00 +$2,781.05)

Absolute Return if Unchanged: +9.3%
Annualized Return If Unchanged (ARIU): +29.0%
(+$1,971.25/$21,218.95)*(365/117 days)

Absolute Return if Exercised: +17.7%
Annualized Return If Exercised (ARIE) +55.1%
(+$3,747.25/$21,218.95)*(365/117 days)

Altria Group Inc -- Continuation Transaction

The following transaction was made today to establish a covered calls position against the 500 shares owned in Altria Group Inc(MO):
03/05/09 Covered Calls Continuation Transaction -- STO 5 Mar09 $16.00 Calls @ $.21

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
09/11/08 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
11/22/08 Nov08 Options Expired
11/24/08 Covered Calls Continuation Transaction -- Sold 3 MO Dec08 $16 Calls at $.63
12/19/08 Dec08 Options Expired
12/22/08 Ex-Dividend of $160.00 ($.32 * 500 shares)
12/22/08 Covered Calls Continuation Transaction -- Sold 3 MO Jan09 $17 Calls at $.32
01/17/09 Jan09 Options Expired
01/20/09 Covered Calls Continuation Transaction -- Sold 3 MO Feb09 $18 Calls at $.40
02/21/09 Feb09 Options Expired
03/05/09 03/05/09 Covered Calls Continuation Transaction -- STO 5 Mar09 $16.00 Calls @ $.21
03/12/09 Ex-Dividend of $160.00 ($.32 * 500 shares)

The overall performance results(including commissions) for the MO transactions are as follows:
Stock Purchase Cost: $10,463.95
($20.91*500+$8.95 commission)

Net Profit:
(a) Options Income: +$1,496.10 (500*($.51+$.43+$.67+$.63+$.32+$.40+$.21) - 7*$12.70 commissions)
(b) Dividend Income: +$465.00 ($145.00+$160.00+$160.00)
(c) Capital Appreciation (If exercised): -$2,463.95
= ($16.00-$20.91)*500 - $8.95 commissions

Total Net Profit(If stock price exercised at $16.00): -$502.85
= (+$1,496.10 +$465.00 -$2,463.95)

Annualized Return If Exercised (ARIE) -8.2%
(-$502.85/$10,463.95)*(365/214 days)

Establish Potash Corp of Saskatchewan Inc Covered Call

A new covered call position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of Potash Corp of Saskatchewan Inc (POT). This is a repeat of a successful covered calls position taken in POT last month which concluded with the call option being exercised and the POT stock was called away at options expiration last Friday.

The rationale in support of re-establishing an investment in Potash remains the same as stated previously when the POT covered calls position was established last month, which was as follows:
Potash Corp (POT) is the world's largest producer of crop fertilizers and they produce each of the three primary fertilizers (potash, phosphates, and nitrogen-based products). Of these three, potash is the most beneficial to farmers in terms of enhancing the productivity of arable acreage; consequently potash is in greatest demand and has the best profit margins of the three fertilizers. Potash Corp. ranks #1 in the world in potash production with about 22% of the world's supply. They are, therefore, in a very enviable position because of the relatively high cost to establish new potash production mines. The stock price of POT has plummeted this year at an even faster rate than the overall market, but this advisor believes that worldwide recession fears have created a temporarily depressed demand for fertilizers along with a steep, but also temporary, decline in feed grain and oilseed futures prices. But as the significant worldwide growth in the numbers of people moving up into the middle class continues (especially in China and India), and they continue to improve their diets (including more protein), the ongoing strong demand for more and more fertilizer will continue. Consequently, prices for corn, soybeans, and wheat are likely now to be reaching the lower end of their future price range, and POT is well positioned for a very nice price rebound when crop prices firm up. In the meantime, Potash Corp maintains their commitment to steadily increasing production capacity to meet the growing demand while maintaining good profit margins and a strong balance sheet. Finally, there is good value in the company's current stock price when it is evaluated in relation to key financial ratio metrics (including P/E ratio, free cash flow, and return-on-equity among others).

Today a covered calls investment was established with the purchase of Potash (POT) and the selling of the Mar09 $80 call option:
03/02/09 Bought 100 POT @ $79.078
03/02/09 Sold 1 POT Mar09 $80.00 Call @ $6.30

Absolute Return if Unchanged: +8.0%
Annualized Return If Unchanged (ARIU): +153.0%
Absolute Return if Exercised: +9.1%
Annualized Return If Exercised (ARIE): +175.4%
Downside Breakeven Price Point: $72.778
Downside Breakeven Protection: 7.0%