Establish EMCOR Group Inc. Covered Calls

A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of EMCOR Group Inc (EME) covered calls as follows:

Established EMCOR Group Inc(EME) Covered Calls for Sep09:
09/25/09 Bought 300 EME @ $24.91
09/25/09 Sold 3 EME Oct09 $25.00 Calls @ $.95

You might recall that covered calls positions were held in EME for both Aug09 and Sep09 expirations and in both cases the positions ended in-the-money and the stock was called away. The strong fundamentals and value-oriented conditions that existed when these previous positions were established remain intact; so it was decided today to re-establish a covered calls position in EME with an Oct09 expiration.

EMCOR Group, Inc. is an Engineering and Construction (E&C) company that provides electrical and mechanical construction and facilities services worldwide. It engages in the design, integration, installation, start-up, operation, and maintenance of various electrical and mechanical systems; heating, ventilation, air conditioning, and refrigeration; fire protection systems; plumbing systems; and various industrial maintenance services. Maintaining a corporate reputation for quality is essential for success in the highly-competitive bidding processes that is commonplace in the E&C industry. EMCOR is preeminent in this regard. In Fortune's Most Admired Companies rankings, EMCOR is #1 in the E&C category; and Forbes rates EMCOR as the "Best Managed" company in the Construction Industry.

Some potential results from this transaction are:
Absolute Return if Stock Price Unchanged at $24.91: +3.8%
Annualized Return If Unchanged (ARIU): +63.2%

Absolute Return if Exercised at $25.00: +4.2%
Annualized Return If Exercised (ARIE): +69.3%

Downside Breakeven Price Point: $23.96
Downside Breakeven Protection: 3.8%

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 capitalization of $201 billion. It is by far the world's largest mobile telecommunications service provider with over 500 million subscribers in China, and it continues to experience significant growth, having added over 45 million new subscribers during the first eight months in 2009. To put their size in perspective, this is approximately three times the total number of wireless subscribers of both Verizon Wireless and AT&T combined.

You might recall that this Advisor had prior covered calls positions in CHL which were assigned at Apr09 and Aug09 expirations. Because CHL continues to rate very highly on the CCAP 'Buy Alerts' spreadsheet (See below that Total Points of 22.42 is well above this advisor's required threshold of 20.0), it was decided to re-establish a covered calls position in CHL with an Oct09 expiration.






















Note: For expanded view, left click on the spreadsheet above.


A summary of the transactions today is as follows:

Established China Mobile LTD ADR Covered Calls for Oct09:
09/24/09 Bought 200 CHL @ $50.25
09/24/09 Sold 2 CHL Oct09 $50.00 Calls @ $1.70

Some potential results from this transaction are:
Absolute Return if Exercised at $50.00: +2.9%
= [$1.70 - ($50.25 - $50.00)]/$50.25
Annualized Return if Exercised(ARIE): +45.8%
= [$1.70 - ($50.25 - $50.00)]/(365/23 days)

Downside Breakeven Price Point: $48.55
= $50.25 - $1.70
Downside Breakeven Protection: 2.9%
This in-the-money position provides up to 0.5% [($50.25-$50.00)/$50.25] downside protection available while still achieving the maximum potential annualized return-on-investment of 45.8% from this covered calls position.

Continuation Transaction -- ProShares Short S&P 500 ETF

Last Friday was expiration Friday for September 2009. In a Covered Calls Advisor's blog recent post, it was noted that of the eleven covered calls positions for September 2009, four were in-the-money and were rolled-out early to an Oct09 expiration, six were in-the-money at expiration and were therefore exercised and the stocks were called away, and one position, ProShares Short S&P 500 ETF(SH) ended out-of-the-money. Today it was decided to retain the 900 shares of ProShares Short S&P 500 ETF (SH) and to establish an Oct09 covered calls position as follows:

09/24/09 Sell-to-Open (STO) 9 SH Oct09 $58.00s @ $.75

The transactions history to date and the profit potential for the continuation covered calls position in SH is as follows:
08/25/09 Bought 900 SH @ $57.74
08/25/09 Sold 9 SH Sep09 $59.00 Calls @ $.80
09/19/09 Sep09 Options Expired
The price of SH closed at $55.73 on expiration Friday.
09/24/09 Sell-to-Open (STO) 9 SH Oct09 $58.00s @ $.75
The price of SH was $56.57 today when this transaction was executed.

The overall performance results(including commissions) for this SH covered calls position would be as follows:
Stock Purchase Cost: $51,974.95
($57.74*900+$8.95 commission)

Net Profit:
(a) Options Income: +$1,363.60
= (900*($.80+$.75) - 2*$15.70 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $56.57):
-$1,061.95
= ($56.57-$57.74)*900 - $8.95 commissions
(c) Capital Appreciation (If exercised at $58.00): +$225.05
= ($58.00-$57.74)*900 - $8.95 commissions

Total Net Profit(If stock price unchanged at $56.57): +$301.65
= (+$1,363.60 +$0.00 -$1,061.95)
Total Net Profit(If stock price exercised at $58.00): +$1,584.55
= (+$1,363.60 +$0.00 +$221.05)

Absolute Return if Stock Price Unchanged at $56.57: +0.6%
= +$301.65/$51,974.95
Annualized Return If Stock Price Unchanged (ARIU): +4.0%
= (+$301.65/$51,974.95)*(365/53 days)

Absolute Return if Exercised at $58.00: +3.0%
= +$1,584.55/$51,974.95
Annualized Return If Exercised (ARIE) +21.0%
= (+$1,584.55/$51,974.95)*(365/53 days)

Establish Family Dollar Stores Inc. Covered Calls

A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of Family Dollar Stores Inc (FDO) covered calls as follows:

Established Family Dollar Stores Inc(FDO) Covered Calls for Oct09:
09/23/09 Bought 300 FDO @ $26.65
09/23/09 Sold 3 FDO Oct09 $27.50 Calls @ $.80

Family Dollar Stores, Inc. operates a chain of over 6,000 self-service retail discount stores for low to lower-middle income consumers in the United States.
This Advisor currently has a slightly cautious view towards domestic consumer spending, but a recent sell-off in FDO resulting from below-forecast 2nd quarter same-store-sales seems overdone. The Covered Calls Advisor thinks that the modest sales shortfall is attributable primarily to (1) the one-year anniversary of the consumer tax rebates in 2008; and (2) some lack of clarity for shoppers resulting from some store layout changes. It is expected that these changes were temporary and that 3%+ same-store-sales will return for FDO in the next several quarters. Consequently, a slightly out-of-the-money position was established in FDO for the Oct09 expiration.

Below is the Covered Calls Advisor's 'Buy Alerts' spreadsheet for FDO. It scored above the threshold of 20.0 with a Total Points rating of 21.42.





















Note: For expanded view, left click on the spreadsheet above.

Some potential results from this FDO covered calls transaction are as follows:

Absolute Return if Unchanged at $26.65: +3.0%
= ($.80/$26.65)
Annualized Return If Unchanged (ARIU): +45.7%
= ($.80/$26.65)*(365/24 days)

Absolute Return if Exercised at $27.50: +6.2%
=[$.80+($27.50-$26.65)]/$26.65
Annualized Return If Exercised (ARIE): +94.2%
=[($.80+($27.50-$26.65)]/$26.65]*(365/24 days)

Downside Breakeven Price Point: $25.85
Downside Breakeven Protection: 3.0%

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.

A summary of the transactions is as follows:
Established UnitedHealth Group Inc Covered Calls for Mar09:
09/23/09 Bought 400 UNH @ $27.05
09/23/09 Sold 4 UNH Oct09 $26.00 Calls @ $1.95

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. 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.

Below is the Covered Calls Advisor's 'Buy Alerts' spreadsheet for UNH. It scored above the Buy threshold of 20.0 with a Total Points rating of 20.55. At its current price of $27.05, UNH provides a reasonable entry point for this value-oriented investor. Nevertheless, because of the uncertainty over the current government debate on healthcare reform, a conservative in-the-money covered calls position was established.





















Note: For expanded view, left click on the spreadsheet above.

Some potential results from this transaction are:
Absolute Return if Exercised at $25.00: +3.3%
= [$1.95 - ($27.05 - $26.00)]/$27.05
Annualized Return if Exercised(ARIE): +50.6%
= [$1.95 - ($27.05 - $26.00)]/(365/24 days)

Downside Breakeven Price Point: $25.10
Downside Breakeven Protection: 7.2%
This in-the-money position also provides up to 3.9% [($27.05-$26.00)/$27.05] downside protection available while still achieving the maximum potential annualized return-on-investment of 50.6% from this covered calls position.

Establish Fluor Corporation Covered Calls

A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of Fluor Corporation(FLR) covered calls as follows:

Established Fluor Corporation(FLR) Covered Calls for Oct09:
09/22/09 Bought 300 FLR @ $54.93
09/22/09 Sold 3 FLR Oct09 $55.00 Calls @ $1.95

Fluor provides engineering, procurement, construction management, and project management services worldwide. Its business is well-balanced with approximately half coming from the oil & gas industry and half from other industrial and government infrastructure projects. As a highly-respected contractor, Flour is poised to benefit from both government infrastructure stimulus efforts and from a recovery from the current recession. In addition, with oil near the $70 level, Flour's stock price is attractively priced and could move significantly higher. Fluor's business is also geographically well-diversified with about half coming from within the U.S. and the other half from numerous countries worldwide. Another very important consideration for the Covered Calls Advisor is a company's valuation characteristics, and Fluor is very attractive on this basis as well.

Some potential results from this Fluor covered calls transaction are as follows:

Absolute Return if Unchanged at $54.93: +3.5%
Annualized Return If Unchanged (ARIU): +51.8%
= ($1.95/$54.93)*(365/25 days)

Absolute Return if Exercised at $55.00: +3.7%
=[$1.95+($55.00-$54.93)]/$54.93
Annualized Return If Exercised (ARIE): +53.7%

Downside Breakeven Price Point: $52.98
Downside Breakeven Protection: 3.5%

September 2009 Expiration Transactions

The Covered Calls Advisor Portfolio (CCAP) contained a total of eleven positions with September 2009 expirations, with the following results:

- Just prior to Sep09 expiration, in-the-money covered call positions in four equities [Accenture(ACN), iShares MSCI China Fund ETF(FXI), iShares MSCI Emerging Markets ETF(EEM), and Noble Corporation(NE)] were rolled to Oct09 expirations. These roll-out transactions were detailed in prior posts this week on this blog.

- One position in the CCAP [ProShares Short S&P 500 ETF(SH)] ended out-of-the-money. A decision will be made to either sell the equity or to keep it and sell calls to establish an Oct09 covered call position. The related transaction will be made early next week and the transaction will be posted on this blog site on the same day it occurs.

- Six positions [Aspen Insurance Holdings Ltd(AHL), Diana Shipping Inc.(DSX), EMCOR Group Inc.(EME), Herbalife Ltd(HLF), Sohu.com Inc.(SOHU), and the United States Natural Gas Fund ETF(UNG)] closed in-the-money. The calls were exercised and the stock was called away. The annualized percent return-on-investment(ROI) results for these six exercised positions were:
Aspen Insurance Holdings Ltd(AHL): +32.1%
Diana Shipping Inc.(DSX): +32.4%
EMCOR Group Inc.(EME): +58.1%
Herbalife Ltd(HLF): +60.1%
Sohu.com Inc.(SOHU): +86.3%
United States Natural Gas Fund ETF(UNG): -34.9%

Detailed results for these six positions that were assigned (called away) upon Sep09 expiration are as follows:

1. Aspen Insurance Holdings Ltd(AHL) -- Closed
The transactions history was as follows:
07/21/09 Bought 500 AHL @ $24.95
07/21/09 Sold 5 AHL Aug09 $25.00 Calls @ $.90
08/22/09 Aug09 Options Expired
Note: Price of AHL closed at $24.74 on expiration Friday.
08/25/09 Sold 500 AHL @ $.50
09/19/09 Sep09 Options Exercised (500 shares of AHL called away at $25.00)
Note: Closing price of AHL was $26.64 on expiration Friday.

The overall performance results(including commissions) for the AHL transactions are as follows:
Stock Purchase Cost: $13,088.95
($24.95*500+$8.95 commission)

Net Profit:
(a) Options Income: +$674.60
= [500*($.90 + $.50) - 2*$12.70 commissions]
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Stock exercised at $25.00): +$16.05
= ($25.00-$24.95)*500 - $8.95 commissions

Total Net Profit: +$690.65
= (+$674.60 +$0.00 +$16.05)

Absolute Return: +5.3%
= +$690.65/$13,088.95
Annualized Return: +32.1%
= (+$690.65/$13,088.95)*(365/60 days)

2. Diana Shipping Inc.(DSX) -- Closed
The transactions history was as follows:
08/24/09 Bought 300 DSX @ $13.52
08/24/09 Sold 3 DSX Sep09 $12.50 Calls @ $1.40
09/19/09 Sep09 Options Exercised (300 shares of DSX called away at $12.50)
Note: Closing price of DSX was $14.01 on expiration Friday.

The overall performance results(including commissions) for the DSX transactions are as follows:
Stock Purchase Cost: $4,064.95
($13.52*300+$8.95 commission)

Net Profit:
(a) Options Income: +$408.80
= [300*$1.40 - $11.20 commissions]
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Stock exercised at $12.50): -$314.95
= ($12.50-$13.52)*300 - $8.95 commissions

Total Net Profit: +$93.85
= (+$408.80 +$0.00 -$314.95)

Absolute Return: +2.3%
= +$93.85/$4,064.95
Annualized Return: +32.4%
= (+$690.65/$13,088.95)*(365/26 days)

3. EMCOR Group Inc.(EME) -- Closed
The transactions history was as follows:
09/02/09 Bought 300 EME @ $22.62
09/02/09 Sold 3 EME Sep09 $22.50 Calls @ $.80
09/19/09 Sep09 Options Exercised (300 shares of EME called away at $22.50)
Note: Closing price of EME was $26.04 on expiration Friday.

The overall performance results(including commissions) for the EME transactions are as follows:
Stock Purchase Cost: $6,794.95
($22.62*300+$8.95 commission)

Net Profit:
(a) Options Income: +$228.80
= (300*$.80 - $11.20 commissions]
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Stock exercised at $22.50): -$44.95
= ($22.50-$22.62)*300 - $8.95 commissions

Total Net Profit: +$183.85
= (+$228.80 +$0.00 -$44.95)

Absolute Return: +2.7%
= +$183.85/$6,794.95
Annualized Return: +58.1%
= (+$183.85/$6,794.95)*(365/17 days)

4. Herbalife Ltd.(HLF) -- Closed
The transactions history was as follows:
09/02/09 Bought 300 HLF @ $30.09
09/02/09 Sold 3 HLF Sep09 $30.00 Calls @ $1.00
09/19/09 Sep09 Options Exercised (300 shares of HLF called away at $30.00)
Note: Closing price of HLF was $33.30 on expiration Friday.

The overall performance results(including commissions) for the HLF transactions are as follows:
Stock Purchase Cost: $9,035.95
($30.09*300+$8.95 commission)

Net Profit:
(a) Options Income: +$288.80
= [300*$1.00 - $11.20 commissions]
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Stock exercised at $30.00): -$35.95
= ($30.00-$30.09)*300 - $8.95 commissions

Total Net Profit: +$252.85
= (+$288.80 +$0.00 -$35.95)

Absolute Return: +2.8%
= +$252.85/$9,035.95
Annualized Return: +60.1%
= (+$252.85/$9,035.95)*(365/17 days)

5. Sohu.com Inc.(SOHU) -- Closed
The transactions history to date is as follows:
05/19/09 Initial Stock Purchase Transaction -- Bought 400 SOHU @ $54.50
05/19/09 Inital Calls Sold Transaction -- Sold 4 SOHU Jun09 $55.00 Calls @ $3.00
A debit-spread transaction was executed as follows:
05/29/09 Buy-to-Close (BTC) 4 SOHU Jun09 $55s @ $5.84
05/29/09 Sell-to-Open (STO) 4 SOHU Jun09 $60s @ $2.51
Note: The price of SOHU was $59.85 today when the debit-spread was transacted.
06/03/09 Buy-to-Close (BTC) 4 SOHU Jun09 $60s @ $6.15
06/03/09 Sell-to-Open (STO) 4 SOHU Jun09 $65s @ $2.89
Note: The price of SOHU was $65.02 today when the debit-spread was transacted.
06/20/09 Jun09 Options Expired
06/24/09 Sell-to-Open (STO) 4 SOHU Jul09 $65s @ $2.85
Note: The price of SOHU was $64.60 today when the debit-spread was transacted.
07/18/09 Jul09 Options Expired
The price of SOHU closed at $62.00 on expiration Friday.
07/20/09 Sell-to-Open (STO) 4 SOHU Aug09 $65.00s @ $3.40
The price of SOHU was $63.80 today when this transaction was executed.
08/22/09 Aug09 Options Expired
The price of SOHU closed at $64.09 on expiration Friday.
08/24/09 Sell-to-Open (STO) 4 SOHU Sep09 $65.00s @ $2.90
The price of SOHU was $64.90 today when this transaction was executed.
09/19/09 Sep09 Options Exercised (400 shares of SOHU called away at $65.00)
Note: Closing price of SOHU was $69.27 on expiration Friday.

The overall performance results(including commissions) for this SOHU covered calls position were as follows:
Stock Purchase Cost: $21,808.95
($54.50*400+$8.95 commission)

Net Profit:
(a) Options Income: +$2,152.30
= (400*($3.00-$5.84+$2.51-$6.15+$2.89+$2.85+$3.40+$2.90) - 6*$11.95 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Stock exercised at $65.00): +$4,191.05
= ($65.00-$54.50)*400 - $8.95 commissions

Total Net Profit(Stock exercised at $65.00): +$6,343.35
= (+$2,152.30 +$0.00 +$4,191.05)

Annualized Return (Stock Exercised at $65.00): +86.3%
= (+$6,343.35/$21,808.95)*(365/123 days)

6. United States Natural Gas Fund ETF(UNG) -- Closed
The transactions history to date is as follows:
06/30/09 Bought 1000 UNG @ $13.92
06/30/09 Sold 10 UNG Jul09 $14.00 Calls @ $.75
07/18/09 Jul09 Options Expired
The price of UNG closed at $13.16 on expiration Friday.
07/22/09 Sell-to-Open (STO) 10 UNG Aug09 $14.00 Calls @ $.75
The price of UNG was $13.73 today when this transaction was executed.
08/22/09 Aug09 Options Expired
The price of UNG closed at $11.35 on expiration Friday.
09/09/09 Sell-to-Open (STO) 10 UNG Sep09 $11.00s @ $.40
The price of UNG was $10.79 today when this transaction was executed.
09/19/09 Sep09 Options Exercised (1000 shares of UNG called away at $11.00)
Note: Closing price of UNG was $11.64 on expiration Friday.

The overall performance results(including commissions) for the UNG transactions were as follows:
Stock Purchase Cost: $13,928.95
($13.92*1000+$8.95 commission)

Net Profit:
(a) Options Income: +$1,850.65
= (1000*($.75+$.75+$.40) - 3*$16.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Equity exercised at $11.00): -$2,928.95
= ($11.00-$13.92)*1000 - $8.95 commissions

Total Net Profit(UNG exercised at $11.00): -$1,078.30
= (+$1,850.65 +$0.00 -$2,928.95)

Absolute Return with UNG Exercised at $11.00: -7.7%
= -$1,078.30/$13,928.95
Annualized Return with UNG Exercised: -34.9%
= (-$1,078.30/$13,928.95)*(365/81 days)

Establish Aspen Insurance Holdings Ltd. Covered Calls

A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of Aspen Insurance Holdings Ltd.(AHL) covered calls as follows:

Established Aspen Insurance Holdings Ltd.(AHL) Covered Calls for Oct09:
09/18/09 Bought 500 AHL @ $26.16
09/18/09 Sold 5 AHL Oct09 $25.00 Calls @ $1.80

Aspen Insurance Holdings Limited, through its subsidiaries, provides insurance and reinsurance products and services in the United Kingdom, the United States, and internationally. AHL's primary business is in catastrophe reinsurance including earthquakes, hurricanes, and floods. Pricing trends are currently positive relative to last year in several of these business areas. Moreover, AHL is continuing to grow and diversify into additional insurance and reinsurance areas while managing its own investment portfolio conservatively. It continues to represent an attractive, value-oriented investment that is expected to earn $4.00 per share this fiscal year. In addition, at AHL's current price the stock trades at only about 80% of its book value. Importantly, we have just passed the traditional peak of the hurricane season without a major event and the presence of the El Nino effect bodes well for the remainder of the season. Another encouraging fact is that investing guru David Einhorn (Greenlight Capital) has taken a large position in several reinsurers and AHL is now one of his top holdings. It is also encouraging that the latest reporting quarter (2nd qtr 2009) shows that he added further to his AHL position.

For this transaction, you might notice that the CCAP already has a Sep09 covered calls position that will probably be exercised today, and you might wonder why that position was not rolled-out to Oct09 via a debit-spread transaction (as was done with the ACN position posted earlier today). The reason is because of the relatively low options liquidity for AHL which results in a relatively wide bid/ask spread on the options. When near the expiration date, this advisor prefers to roll only when the options bid/ask spread is $.10 or less. If greater than $.10, then the existing position is allowed to be exercised and a separate covered calls transaction is made to establish the new next-month position.

Some potential results from this transaction are:
Absolute Return if Exercised at $25.00: +2.4%
= [$1.80 - ($26.16 - $25.00)]/$26.16
Annualized Return if Exercised(ARIE): +30.8%
= [$1.80 - ($26.16 - $25.00)]/(365/29 days)

Downside Breakeven Price Point: $24.36
Downside Breakeven Protection: 6.9%
This in-the-money position also provides up to 4.4% [($26.16-$25.00)/$26.16] downside protection available while still achieving the maximum potential annualized return-on-investment of 30.8% from this covered calls position.

Roll Out -- Accenture Ltd. (ACN)

With today being options expiration Friday for September 2009, it was decided to retain the Covered Calls Advisor Portfolio position in Accenture Ltd. (ACN) and to roll-out to the Oct09 expiration at the same $35.00 strike price. The Sep09 $35.00covered calls were in-the-money today (with ACN at $36.08), and since the time value remaining in the options was only $.02 [$1.10-($36.08-$35.00)], a roll-out debit spread transaction was executed as follows:
09/18/09 Buy-to-Close (BTC) 10 ACN Sep09 $35.00s @ $1.10
09/18/09 Sell-to-Open (STO) 10 ACN Oct09 $35.00s @ $1.90
Note: Net Debit-Spread upon Roll-Up was $.80 ($1.10 - $1.90)

The transactions history to date is as follows:
08/24/09 Bought 300 ACN @ $35.51
08/24/09 Sold 3 ACN Sep09 $35.00 Calls @ $1.15
Roll-Out Transaction:
09/18/09 Buy-to-Close (BTC) 10 ACN Sep09 $35.00s @ $1.10
09/18/09 Sell-to-Open (STO) 10 ACN Oct09 $35.00s @ $1.90
Note: The price of ACN was $36.08 today when this debit-spread was transacted.

The overall performance results(including commissions) for the ACN transactions would be as follows:
Stock Purchase Cost: $10,661.95
= ($35.51*300+$8.95 commission)

Net Profit:
(a) Options Income: +$562.60
= (300*($1.15-$1.10+$1.90) - 2*$11.20 commissions)
(b) Dividend Income: +$225.00 ($.75 * 300 shares)
(c) Capital Appreciation (If exercised at $35.00): -$161.95
= ($35.00-$35.51)*300 - $8.95 commissions

Total Net Profit(If stock price exercised at $35.00): +$625.65
= (+$562.60 +$225.00 -$161.95)

Absolute Return if Exercised at $35.00: +5.9%
= +$625.65/$10,661.95
Annualized Return If Exercised (ARIE) +39.7%
= (+$625.65/$10,661.95)*(365/54 days)

An annual dividend of $.75 per share will be made with an ex-div date of 10/14/09. In this case, it is possible (if the stock remains in-the-money) that an early exercise might occur on 10/13/09 in order for the option owner to call the stock away at $35.00 to capture the dividend payment. If this occurs, the Covered Calls Advisor will achieve a somewhat reduced 29.2% annualized return for this ACN covered calls investment instead of the 39.7% if the position were to be exercised at expiration.

Roll Up and Out -- iShares MSCI China Fund ETF (FXI), iShares MSCI Emerging Markets ETF (EEM), and Noble Corporation (NE)

With only one day remaining until September expiration, it was decided to retain positions in FXI, EEM, and NE and to roll them up to a higher strike price and out to the Oct09 expiration. In each case, the Sep09 covered calls positions were substantially in-the-money and the time value remaining in each case was only $.05 or less on the Sep09 options. Most importantly, the Covered Calls Advisor decided to retain positions in these equities to establish next month (Oct09) covered call positions, so a roll-up-and-out debit spread transaction was executed in each instance to achieve this result. The transactions history to date and the profit potential for each of these equities is detailed below.

1. iShares MSCI China ETF Fund (FXI) -- Continuation Transaction
The following debit spread transaction was made today to establish an Oct09 covered calls position against the 1000 shares owned in iShares MSCI China ETF Fund (FXI):
09/17/09 Buy-to-Close (BTC) 10 FXI Sep09 $39.00s @ $4.97
09/17/09 Sell-to-Open (STO) 10 FXI Oct09 $43.00s @ $2.02
The price of FXI was $43.93 today when this transaction was executed and the remaining time value in the Sep09 option was only $.04 [$4.97-($43.93-$39.00)].

The transactions history to date is as follows:
08/28/09 Bought 1000 FXI @ $40.04
08/28/09 Sold 10 FXI Sep09 $39.00 Calls @ $1.95
Roll-Up-and-Out Transaction:
09/17/09 Buy-to-Close (BTC) 10 FXI Sep09 $39.00s @ $4.97
09/17/09 Sell-to-Open (STO) 10 FXI Oct09 $43.00s @ $2.02
Note: The price of FXI was $43.93 today when this debit-spread was transacted.

The overall performance results(including commissions) for this FXI covered calls position would be as follows:
Stock Purchase Cost: $40,048.95
($40.04*1000+$8.95 commission)

Net Profit:
(a) Options Income: -$1,032.90
= (1000*($1.95-$4.97+$2.02) - 2*$16.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If exercised at $43.00): +$2,951.05
= ($43.00-$40.04)*1000 - $8.95 commissions

Total Net Profit(If stock price exercised at $43.00): +$1,918.15
= (-$1,032.90 +$0.00 +$2,951.05)

Absolute Return if Exercised at $43.00: +4.8%
= +$1,918.15/$40,048.95
Annualized Return If Exercised (ARIE) +35.0%
= (+$1,918.15/$40,048.95)*(365/50 days)


2. iShares MSCI Emerging Markets ETF (EEM) -- Continuation Transaction
The following debit spread transaction was made today to establish an Oct09 covered calls position against the 500 shares owned in iShares MSCI Emerging Markets ETF (EEM):
09/17/09 Buy-to-Close (BTC) 5 EEM Sep09 $36.00s @ $3.29
09/17/09 Sell-to-Open (STO) 5 EEM Oct09 $38.00s @ $2.14
The price of EEM was $39.24 today when this transaction was executed.

The transactions history to date is as follows:
08/25/09 Bought 500 EEM @ $36.64
08/25/09 Sold 5 EEM Sep09 $36.00 Calls @ $1.56
Roll-Up-and-Out Transaction:
09/17/09 Buy-to-Close (BTC) 5 EEM Sep09 $36.00s @ $3.29
09/17/09 Sell-to-Open (STO) 5 EEM Oct09 $38.00s @ $2.14
Note: The price of EEM was $39.24 today when this debit-spread was transacted and the remaining time value in the Sep09 option was only $.05 [$3.29-($39.24-$36.00)].

The overall performance results(including commissions) for this EEM covered calls position would be as follows:
Stock Purchase Cost: $18,328.95
($36.64*500+$8.95 commission)

Net Profit:
(a) Options Income: +$179.60
= (500*($1.56-$3.29+$2.14) - 2*$12.70 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If exercised at $38.00): +$671.05
= ($38.00-$36.64)*500 - $8.95 commissions

Total Net Profit(If stock price exercised at $38.00): +$850.65
= (+$179.60 +$0.00 +$671.05)

Absolute Return if Exercised at $38.00: +4.6%
= +$850.65/$18,328.95
Annualized Return If Exercised (ARIE) +32.0%
= (+$850.65/$18,328.95)*(365/53 days)


3. Noble Corporation (NE) -- Continuation Transaction
The following debit spread transaction was made today to establish an Oct09 covered calls position against the 300 shares owned in Noble Corporation (NE):
09/17/09 Buy-to-Close (BTC) 3 NE Sep09 $34.00s @ $5.22
09/17/09 Sell-to-Open (STO) 3 NE Oct09 $36.00s @ $3.87
The price of NE was $39.19 today when this transaction was executed.

The transactions history to date is as follows:
09/02/09 Bought 300 NE @ $33.98
09/02/09 Sold 3 NE Sep09 $34.00 Calls @ $1.30
Roll-Up-and-Out Transaction:
09/17/09 Buy-to-Close (BTC) 3 NE Sep09 $34.00s @ $5.22
09/17/09 Sell-to-Open (STO) 3 NE Oct09 $36.00s @ $3.87
Note: The price of NE was $39.19 today when this debit-spread was transacted and the remaining time value in the Sep09 option was only $.03 [$5.22-($39.19-$34.00)].

The overall performance results(including commissions) for this NE covered calls position would be as follows:
Stock Purchase Cost: $10,202.95
($33.98*300+$8.95 commission)

Net Profit:
(a) Options Income: -$37.40
= (300*($1.30-$5.22+$3.87) - 2*$11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If exercised at $36.00): +$597.05
= ($36.00-$33.98)*300 - $8.95 commissions

Total Net Profit(If stock price exercised at $36.00): +$559.65
= (-$37.40 +$0.00 +$597.05)

Absolute Return if Exercised at $36.00: +5.5%
= +$559.65/$10,202.95
Annualized Return If Exercised (ARIE) +44.5%
= (+$559.65/$10,202.95)*(365/45 days)

Establish Amgen Inc. Covered Calls

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

Established Amgen Inc.(AMGN) Covered Calls for Oct09:
09/17/09 Bought 300 AMGN @ $59.88
09/17/09 Sold 3 AMGN Oct09 $57.50 Calls @ $3.75

Amgen Inc. is one of the world's largest biotechnology companies. It engages in the discovery, development, manufacture, and marketing of human therapeutics based on advances in cellular and molecular biology. The company markets human therapeutic products primarily in the areas of supportive cancer care, nephrology, and inflammation. Its principal products include Aranesp and EPOGEN that stimulate the production of red blood cells to treat anemia; Neulasta and NEUPOGEN, which selectively stimulate the production of neutrophils, a type of white blood cell that helps the body fight infections; and ENBREL that blocks the biologic activity of tumor necrosis factor by inhibiting TNF, a substance induced in response to inflammatory and immunological responses, such as rheumatoid arthritis and psoriasis. The company has a joint venture with Kirin Holdings Company, Limited to manufacture and market darbepoetin alfa; a co-promotion agreement with Wyeth for marketing and selling of ENBREL; and Johnson & Johnson to commercialize recombinant human erythropoietin as a human therapeutic. It markets its products to healthcare providers, including physicians or their clinics, dialysis centers, hospitals, and pharmacies primarily in the United States, Europe, and Canada. The company was founded in 1980 and is based in Thousand Oaks, California.

This advisor believes that Amgen's late-stage research drug denosumab could be a short-term catalyst for the stock price. It will be presenting progression free survival results for its breast cancer trials at the European Society of Medical Oncology (ESMO)conference next week. Another potential catalyst from this conference could come from Amgen's report on Vectibix (for colon cancer). Positive results could put Vectibix on track to potentially gain future market share versus the current preferred treatment (Merck's Erbitux). Possible further benefit could accrue from the PDUFA (Prescription Drug User Fee Act) date scheduled a month from now for denosumab for its FDA application for osteoporosis. Despite the likelihood of these positive catalysts, the Covered Calls Advisor is establishing a relatively conservative in-the-money position at this time, primarily in deference to the current Overall Market Meter (see right sidebar) rating of Neutral.

Below is the Covered Calls Advisor's 'Buy Alerts' spreadsheet for AMGN. It scored slightly above the Buy threshold of 20.0 with a Total Points rating of 20.24.






















Note: For expanded view, left click on the spreadsheet above.

Some potential results from this transaction are:
Absolute Return if Exercised at $57.50: +2.3%
= [($3.75 -($59.88-$57.50)]/$59.88
Annualized Return If Exercised (ARIE): +27.8%
= [($3.75 -($59.88-$57.50))/$59.88]*(365/30 days)

Downside Breakeven Price Point: $56.13
Downside Breakeven Protection: 6.3%
Also, this in-the-money position affords up to 4.0% [($59.88-$57.50)/$59.88] downside protection available while still achieving the maximum potential annualized return-on-investment of 27.8% from this covered calls position.

Continuation Transaction -- U.S. Natural Gas Fund

The Covered Calls Advisor's Aug09 UNG covered calls position expired out-of-the-money. Today it was decided to retain the 1000 shares of the U.S. Natural Gas Fund (UNG) and to establish a Sep09 covered calls position as follows:

09/09/09 Sell-to-Open (STO) 10 UNG Sep09 $11.00s @ $.40

The price of Nat Gas has plunged recently and even traded below $2.50, which is well below the $3.00 floor expected by this advisor. However, as the price rebounded somewhat in the past two days to the $2.90 area, it was decided to continue with the UNG covered calls position for the Sep09 expiration and to re-evaluate late next week as to whether the position should be extended to an Oct09 expiration.

The transactions history to date is as follows:
06/30/09 Bought 1000 UNG @ $13.92
06/30/09 Sold 10 UNG Jul09 $14.00 Calls @ $.75
07/18/09 Jul09 Options Expired
The price of UNG closed at $13.16 on expiration Friday.
07/22/09 Sell-to-Open (STO) 10 UNG Aug09 $14.00 Calls @ $.75
The price of UNG was $13.73 today when this transaction was executed.
08/22/09 Aug09 Options Expired
The price of UNG closed at $11.35 on expiration Friday.
09/09/09 Sell-to-Open (STO) 10 UNG Sep09 $11.00s @ $.40
The price of UNG was $10.79 today when this transaction was executed.

The overall performance results(including commissions) for the UNG transactions would be as follows:
Stock Purchase Cost: $13,928.95
($13.92*1000+$8.95 commission)

Net Profit:
(a) Options Income: +$1,850.65
= (1000*($.75+$.75+$.40) - 3*$16.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock unchanged at $10.79): -$3,138.95
= ($10.79-$13.92)*1000 - $8.95 commissions
(c) Capital Appreciation (If exercised at $11.00): -$2,928.95
= ($11.00-$13.92)*1000 - $8.95 commissions

Total Net Profit(If stock price unchanged at $10.79): -$1,288.30
= (+$1,850.65 +$0.00 -$3,138.95)
Total Net Profit(If stock price exercised at $11.00): -$1,078.30
= (+$1,850.65 +$0.00 -$2,928.95)

Absolute Return if Stock Price Unchanged at $10.79: -9.2%
= -$1,288.30/$13,928.95
Annualized Return If Unchanged (ARIU): -41.7%
= (-$1,288.30/$13,928.95)*(365/81 days)

Absolute Return if Exercised at $11.00: -7.7%
= -$1,078.30/$13,928.95
Annualized Return If Exercised (ARIE): -34.9%
= (-$1,078.30/$13,928.95)*(365/81 days)

Establish Herbalife Ltd. Covered Calls

A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of Herbalife Ltd (HLF) covered calls as follows:

Established Herbalife Ltd (HLF) Covered Calls for Sep09:
09/02/09 Bought 300 HLF @ $30.09
09/02/09 Sold 3 HLF Sep09 $30.00 Calls @ $1.00

Herbalife Ltd., a distributor network marketing company, sells weight management, nutritional supplement, energy, sports and fitness, and personal care products worldwide. Herbalife obtains about 80% of its sales internationally. Its most attractive current growth opportunity is in China where they have been recently licensed to increase their presence from five to ten provinces.

You might recall that a covered calls position with an AUG09 expiration was held in Herbalife. The position ended in-the-money and the stock was called away. As demonstrated by this advisor's 'Buy Alerts' spreadsheet below, the strong fundamentals and value-oriented conditions that existed when the previous position was established still remain; so it was decided today to re-establish a covered calls position in HLF with a SEP09 expiration. This Advisor currently has a moderately cautious view towards consumer spending, so a slightly in-the-money covered calls position was established.

Below is the Covered Calls Advisor's 'Buy Alerts' spreadsheet for HLF. It scored well above the minimum threshold of 20.0 with a Total Points rating of 21.82.






















Note: For expanded view, left click on the spreadsheet above.

Some potential results from this transaction are:
Absolute Return if Exercised at $30.00: +3.3%
= [($1.00-($30.09-$30.00)]/$30.09
Annualized Return If Exercised (ARIE): +64.9%
= [($1.00 -($30.09-$30.00))]/($30.09)]*(365/17 days)

Downside Breakeven Price Point: $29.09
Downside Breakeven Protection: 3.6%

Establish Noble Corp. Covered Calls

A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of Noble Corp.(NE) covered calls as follows:

Established Noble Corp.(NE) Covered Calls for Sep09:
09/02/09 Bought 300 NE @ $33.98
09/02/09 Sold 3 NE Sep09 $34.00 Calls @ $1.30

Noble Corporation provides contract drilling services for the oil and gas industry. It supplies its 43 jack-ups and 20 deepwater rigs to a worldwide exploration and production market for corporate and state-owned customers in the Gulf of Mexico, Brazil, Middle East, W. Africa, and India.

Noble Corp's stock is attractively priced -- the entire company is valued slightly below the liquidation value of its rig fleet. And it is also attractive on several other key valuation metrics, including: (1) lowest P/E ratio in 20 years; (2) strong balance sheet with debt-to-capitalization declining to 11.7%; and a good cash position; (3) an ongoing commitment to share buybacks; (4) strong and increasing cash flow; (5) very strong recent cost control performance. These results are a testimony to the capabilities being demonstrated by the relatively new senior management team. This Covered Calls Advisor believes that the decision to re-domicile to Switzerland (from the Caymans) was one important demonstration of management's good strategic vision. And in the highly cyclical oil & gas industry, their prudent, conservative approach to cost controls as well as contract management seems very sensible. If oil pricing can show some stability above $60 over the next few months, then the continuing softness in rig demand will begin to improve -- and Noble is well positioned to benefit as this occurs. In addition, management's future growth focus on worldwide deepwater rigs should serve it well.

Some potential results from this transaction are:
Absolute Return if Stock Price Unchanged at $33.98: +3.8%
Annualized Return If Unchanged (ARIU): +82.1%

Absolute Return if Exercised at $34.00: +3.9%
Annualized Return If Exercised (ARIE): +83.4%

Downside Breakeven Price Point: $32.68
Downside Breakeven Protection: 3.8%

Establish EMCOR Group Inc. Covered Calls

A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of EMCOR Group Inc (EME) covered calls as follows:

Established EMCOR Group Inc(EME) Covered Calls for Sep09:
09/02/09 Bought 300 EME @ $22.36
09/02/09 Sold 3 EME Sep09 $22.50 Calls @ $.85

You might recall that a covered calls position with an AUG09 expiration was held in EMCOR Group, Inc. The position ended in-the-money and the stock was called away. The strong fundamentals and value-oriented conditions that existed when the previous position was established still remain; so it was decided today to re-establish a covered calls position in EME with a SEP09 expiration.

EMCOR Group, Inc. is an engineering and construction company that provides electrical and mechanical construction and facilities services worldwide. It engages in the design, integration, installation, start-up, operation, and maintenance of various electrical and mechanical systems; heating, ventilation, air conditioning, and refrigeration; fire protection systems; plumbing systems; and various industrial maintenance services.

Some potential results from this transaction are:
Absolute Return if Stock Price Unchanged at $22.36: +3.8%
Annualized Return If Unchanged (ARIU): +81.5%

Absolute Return if Exercised at $22.50: +4.4%
Annualized Return If Exercised (ARIE): +95.1%

Downside Breakeven Price Point: $21.51
Downside Breakeven Protection: 3.8%