The Covered Calls Advisor Portfolio (CCAP) covered calls position in ProShares Short S&P 500 ETF (SH) was closed out today (11/16/09).
The transactions history was as follows:
10/28/09 Bought 600 SH @ $55.92
10/28/09 Sold 6 SH Nov09 $58.00 Calls @ $.65
10/29/09 Bought 300 SH @ $56.05
10/29/09 Sold 3 SH Nov09 $57.00 Calls @ $.90
11/16/09 Bought to Close 3 SH Nov09 $57.00 Calls @ $.05
11/16/09 Bought to Close 6 SH Nov09 $58.00 Calls @ $.05
11/16/09 Sold 900 SH @ $53.22
The ProShares Short S&P 500 ETF tracks the inverse of the S&P 500 index. As stated when the positions were established: "this approach was done to hedge the overall CCAP to provide a better match with the current Overall Market Meter rating (see upper right sidebar) of "Neutral", whereas the CCAP's normal 100% long equities approach tends to result in a slightly bullish posture." But the overall market has continued its bullishness, so the results from this hedge have been very disappointing. The lesson learned from this investment is to avoid trying to anticipate directional changes in the market and to invest along with the market's overall momentum, which at the present time continues to be bullish.
The overall performance results(including commissions) for the SH transactions were as follows:
Stock Purchase Cost: $50,384.90
($55.92*600+$$56.05*300+$8.95*2 commissions)
Net Profit:
(a) Options Income: +$635.35 [600*$.65 + 300*$.90 - (2*$8.95 + 9*$.75) commissions]
(b) Dividend Income: +$0.00
(c) Capital Appreciation: -$2,477.95
= [($53.22-$55.92)*600 +($53.22-$56.05)*300 - $8.95 commissions]
Total Net Profit: -$1,842.60
= (+$635.35 +$0.00 -$2,477.95)
Absolute Return = -3.7%
= -$1,842.60/$50,384.90
Annualized Return: -70.3%
= (-$1,842.60/$50,384.90)*(365/19 days)
