Returns -- Through March 2010

1. March 2010 Year-to-Date Results:

As shown in the table below, the Covered Calls Advisor Portfolio (CCAP) has underperformed the Russell 3000 benchmark by 2.15 percentage points (+3.35%-5.50%) so far in 2010:









CCAP Absolute Return (Jan 1st through March 31st, 2010) = +3.35%
($284,720.85-$275,491.90)/$275,491.90

Benchmark Russell 3000(IWV) Absolute Return(Jan 1st through March 21st,2009) = +5.50%
($68.87-$65.28)/$65.28


2. Prior Years Results:
The Covered Calls Advisor Portfolio (CCAP) was begun in September, 2007. The annualized returns achieved for 2007, 2008, and 2009 compared with the Russell 3000 benchmark results were as follows:

As a reminder, the Covered Calls Advisor Portfolio is not identical to the advisor's personal portfolio. However, it does provide a comparable overall portfolio return result since all positions in the CCAP are also held in the personal portfolio. To ensure comparability, all transaction dates and transaction prices herein are identical to those that were established in the Covered Calls Advisor's personal portfolio. The only difference between the two accounts is the total number of shares held for each equity; with this approach used to preserve the confidentiality of the value of the Covered Call Advisor's personal portfolio.

In addition, the Covered Calls Advisor uses a bottom-line performance measure to determine overall portfolio investment performance results -- it is called 'Total Account Value Return Percent. Here's an example to aid understanding of how the overall portfolio performance is determined:
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.

As shown in the right sidebar near the top of this page, the Covered Calls Advisor's current Overall Market Meter rating remains "SLIGHTLY BULLISH". The corresponding investing strategy is to, on-average, sell 2% out-of-the-money covered calls for the nearest expiration month (now Apr2010).

If you have any comments or questions, please feel free to submit them -- they are always welcomed. Click the 'comments' link below. If you prefer confidential communications, my email address is listed at the top-right sidebar of this blog site.

Regards and Godspeed,
Jeff

Establish International Paper Co. Covered Calls

A new covered calls position was established in the Covered Calls Advisor Portfolio(CCAP) with the purchase of International Paper Co.(IP) covered calls as follows:

Established International Paper Co.(IP) Covered Calls for Apr2010:
03/26/2010 Bought 300 IP @ $25.07
03/29/2010 Sold 3 IP Apr2010 $26.00 Calls @ $.45

International Paper Company operates as a paper and packaging company with operations in North America, Europe, Latin America, the Russian Federation, Asia, and north Africa. Its Printing Papers segment produces uncoated printing and writing papers, including uncoated papers, market pulp, and uncoated bristols. The company's Industrial Packaging segment manufactures containerboards. Its products include linerboard, medium, whitetop, recycled linerboard, recycled medium, and saturated kraft. Its Consumer Packaging segment produces coated paperboard for various packaging and commercial printing end uses. The company's Distribution segment provides services and products to various customer markets, supplying commercial printers with printing papers and graphic pre-press, printing presses, and post-press equipment; the building services and away-from-home markets with facility supplies; and manufacturers with packaging supplies and equipment, as well as offers warehousing and delivery services. Its Forest Products segment owns and manages forest lands primarily in the United States.

Credit Suisse recently issued a very bullish analysis of containerboard stocks in which they highlighted the following catalysts: (1) containerboard pricing is poised to increase as the overall economy improves since the industry is already operating at 95% of capacity while current inventories are at 15-year lows; and (2) analysts' current average earnings estimates are low in comparison to likely results for the next several quarters. The predicted pricing strength is now even more apparent since IP has recently announced an increase to a record level of $640/ton for containerboard which will go into effect beginning April 1st.

For the Covered Calls Advisor's "Buy Alerts" spreadsheet (shown below), IP achieved a total points rating of 16.03, which exceeds the desired minimum threshold of 15.0 for investment:





















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


Two possible overall performance results(including commissions) for the International Paper transactions would be as follows:
Stock Purchase Cost: $7,529.95
= ($25.07*300+$8.95 commission)

Net Profit:
(a) Options Income: +$126.05
= (300*$.45 - $11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $25.07):
-$8.95 = ($25.07-$25.07)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised at $26.00): +$270.05
= ($26.00-$25.07)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $25.07): +$117.10
= (+$126.05 +$0.00 -$8.95)
Total Net Profit(If stock price exercised at $26.00): +$396.10
= (+$126.05 +$0.00 +$270.05)

Absolute Return if Unchanged at $25.07: +1.6%
= +$117.10/$7,529.95
Annualized Return If Unchanged (ARIU) +25.8%
= (+$117.10/$7,529.95)*(365/22 days)

Absolute Return if Exercised at $26.00: +5.3%
= +$396.10/$7,529.95
Annualized Return If Exercised (ARIE) +87.3%
= (+$396.10/$7,529.95)*(365/22 days)

Continuation Transactions -- iShares MSCI China ETF, National Oilwell Varco, and Noble Corporation

In a recent post on this Covered Calls Advisor's blog, it was noted that of the nine covered calls positions held until expiration for March 2010: (1) Three were in-the-money at expiration and were therefore exercised and the stocks were called away; and (2) Six positions ended out-of-the-money. As of this morning, decisions remained to me made for three of the six out-of-the-money positions. A decision was made to retain all three equities in the Covered Calls Advisor Portfolio (CCAP) and to re-establish covered calls positions for Apr2010 expirations. Detailed explanations of the covered calls positions established today for iShares MSCI China ETF (FXI), National Oilwell Varco (NOV), and Noble Corporation (NE) are as follows:

1. iShares MSCI China ETF (FXI) -- Continuation
The Covered Calls Advisor Portfolio(CCAP) position in iShares MSCI China ETF (FXI)was out-of-the-money at Mar2010 expiration. Today it was decided to retain the 1,000 shares of iShares MSCI China ETF and to establish an Apr2010 covered calls position as follows:

03/29/2010 Sell-to-Open (STO) 10 FXI Apr2010 $43.00s @ $.33

The transactions history to date for the covered calls position in iShares MSCI China ETF(FXI) is as follows:
11/18/09 Bought 600 FXI @ $45.54
11/18/09 Sold 6 FXI Dec09 $46.00 Calls @ $1.44
11/27/09 Bought 400 FXI @ $42.54
11/27/09 Sold 4 FXI Dec09 $44.00 Calls @ $1.13
12/19/09 Dec09 Options Expired
12/24/09 Sell-to-Open (STO) 10 FXI Jan2010 $43.00s @ $.63
Note: Price of FXI was $42.22 when the Jan2010 options were sold.
03/01/2010 Sell-to-Open (STO) 10 FXI Mar2010 $42.00s @.46
Note: Price of FXI was $40.54 when the Mar2010 options were sold.
03/20/2010 Mar2010 Options Expired
03/29/2010 Sell-to-Open (STO) 10 FXI Apr2010 $43.00s @ $.33
Note: Price of FXI was $41.49 when the Apr2010 options were sold.

Two possible performance results (including commissions) for the FXI transactions would be as follows:
Stock Purchase Cost: $44,357.90
= ($45.54*600+$42.54*400+2*$8.95 commission)

Net Profit:
(a) Options Income: +$2,683.75
= (600*($1.44+$.63+$.46+$.33)+400*($1.13+$.63+$.46+$.33) - 5*$10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $41.49):
-$2,858.95 = [($41.49-$45.54)*600-($41.49-$42.54)*400] - $8.95 commissions
(c) Capital Appreciation (If exercised at $43.00): -$1,948.95
= [($42.00-$45.54)*600-($43.00-$42.54)*400] - $8.95 commissions

Total Net Profit(If stock price unchanged at $41.49): -$175.20
= (+$2,683.75 +$0.00 -$2,858.95)
Total Net Profit(If stock exercised at $43.00): +$734.80
= (+$2,683.75 +$0.00 -$1,948.95)

Absolute Return if Stock Price Unchanged at $41.49: -0.4%
= -$175.20/$44,357.90
Annualized Return If Unchanged (ARIU): -1.0%
= (-$175.20/$44,357.90)*(365/150 days)

Absolute Return if Stock Exercised at $43.00: +1.7%
= +$734.80/$44,357.90
Annualized Return If Exercised (ARIE): +4.0%
= (+$734.80/$44,357.90)*(365/150 days)


2. National Oilwell Varco (NOV) -- Continuation
The Covered Calls Advisor Portfolio(CCAP) position in National Oilwell Varco (NOV) was out-of-the-money at Mar2010 expiration. Today it was decided to retain the 300 shares of National Oilwell Varco and to establish an Apr2010 covered calls position as follows:

03/29/2010 Sell-to-Open (STO) 3 NOV Apr2010 $42.00s @ $.50

The transactions history to date for the covered calls position in National Oilwell Varco (NOV) is as follows:
01/20/2010 Bought 300 NOV @ $45.80
01/20/2010 Sold 3 NOV Feb2010 $46.00 Calls @ $1.75
02/20/2010 Feb2010 Options Expired
03/01/2010 Sold 3 NOV Mar2010 $44.00 Calls @ $.95
Note: The price of NOV was $43.55 today when these Mar2010 options were sold.
03/20/2010 Mar2010 Options Expired
03/29/2010 Sell-to-Open (STO) 3 NOV Apr2010 $42.00s @ $.50
Note: Price of NOV was $40.31 when the Apr2010 options were sold.

Two possible performance results (including commissions) for the NOV transactions would be as follows:
Stock Purchase Cost: $13,748.95
= ($45.80*300+$8.95 commission)

Net Profit:
(a) Options Income: +$926.40
= (300*($1.75+$.95+$.50) - 3*$11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $40.31):
-$1,655.95 = ($40.31-$45.80)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised at $42.00): -$1,148.95
= ($42.00-$45.80)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $40.31): -$729.55
= (+$926.40 +$0.00 -$1,655.95)
Total Net Profit(If stock price exercised at $42.00): -$222.55
= (+$926.40 +$0.00 -$1,148.95)

Absolute Return if Unchanged at $40.31: -5.3%
= -$729.55/$13,748.95
Annualized Return If Unchanged (ARIU) -22.3%
= (-$729.55/$13,748.95)*(365/87 days)

Absolute Return if Exercised at $42.00: -1.6%
= -$222.55/$13,748.95
Annualized Return If Exercised (ARIE) -6.8%
= (-$222.55/$13,748.95)*(365/87 days)


3. Noble Corporation (NE) -- Continuation
The Covered Calls Advisor Portfolio(CCAP) position in Noble Corporation (NE) was out-of-the-money at Mar2010 expiration. Today it was decided to retain the 300 shares of Noble Corp. and to establish an Apr2010 covered calls position as follows:

03/29/2010 Sell-to-Open (STO) 3 NE Apr2010 $42.00s @ $.45

The reader might recall that a new covered calls position was established in Noble Corp. on March 24, 2010 which doubled the holdings in NE from 300 to 600 shares. This transaction is a continuation of the covered calls position in the 300 shares of NE that were originally purchased in September 2009.

The transactions history to date for the covered calls position originally established in Sept2009 in Noble Corporation (NE) 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)].
Roll-Up-and-Out Transaction:
10/16/09 Buy-to-Close (BTC) 3 NE Oct09 $36.00s @ $5.60
10/16/09 Sell-to-Open (STO) 3 NE Nov09 $42.00s @ $1.75
Note: The price of NE was $41.56 today when this transaction occurred.
11/05/09 Ex-Dividend = $14.70 (300 shares*$.049)
11/21/09 Nov09 Options Expired
11/23/09 Sell-to-Open (STO) 3 NE Dec09 $42.00s @ $1.45
Note: Price of NE was $41.30 when the Dec09 options were sold.
12/19/09 Dec09 Options Expired
12/21/09 Sell-to-Open (STO) 3 NE Jan2010 $43.00s @ $.90
Note: Price of NE was $41.75 when the Jan2010 options were sold.
01/15/2010 Buy-to-Close (BTC) 3 NE Jan2010 $43.00s @ $.70
01/15/2010 Sell-to-Open (STO) 3 NE Feb2010 $45.00s @ $1.30
Note: Price of NE was $43.67 when the Feb2010 options were sold.
02/20/2010 Feb2010 Options Expired
03/01/2010 Sold 3 NE Mar2010 $44.00 Calls @ $.60
Note: The price of NE was $42.84 today when these Mar2010 options were sold.
03/20/2010 Mar2010 Options Expired
03/29/2010 Sell-to-Open (STO) 3 NE Apr2010 $42.00s @ $.45
Note: Price of NE was $40.44 when the Apr2010 options were sold.

Two possible 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: -$59.60
= (300*($1.30-$5.22+$3.87-$5.60+$1.75+$1.45+$.90-$.70+$1.30+$.60+$.45) - 8*$11.20 commissions)
(b) Dividend Income: +$14.70 ($.049 *300 shares)
(c) Capital Appreciation (If stock price unchanged at $40.44): +$1,929.05
= ($40.44-$33.98)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised at $42.00): +$2,397.05
= ($42.00-$33.98)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $40.44): +$1,884.15
= (-$59.60 +$14.70 +$1,929.05)
Total Net Profit(If stock price exercised at $42.00): +$2,352.15
= (-$59.60 +$14.70 +$2,397.05)

Absolute Return if Stock Price Unchanged at $40.44: +18.5%
= +$1,884.15/$10,202.95
Annualized Return If Unchanged (ARIU) +29.7%
= (+$1,884.15/$10,202.95)*(365/227 days)

Absolute Return if Exercised at $42.00: +23.1%
= +$2,352.15/$10,202.95
Annualized Return If Exercised (ARIE) +37.1%
= (+$2,352.15/$10,202.95)*(365/227 days)

China Unicom (CHU) -- Closed

Expiration Friday for March 2010 occurred on March 19th. In a recent post on this Covered Calls Advisor's blog, it was noted that of the nine covered calls positions held until expiration for March 2010: (1) Three were in-the-money at expiration and were therefore exercised and the stocks were called away; and (2) Six positions ended out-of-the-money. One of the covered calls that was out-of-the-money at Mar2010 expiration was China Unicom (CHU). Today, it was decided to sell the 500 shares of China Unicom owned in the Covered Calls Advisor's Portfolio.

The two primary reasons for liquidating the China Unicom (CHU) holding were: (1) The performance of CHU since its purchase in the CCAP last October has been poor. Although this advisor detects no fundamental breakdown in the fundamentals of the company, it was decided that market exposure to China is better achieved via the FXI ETF rather than from selecting individual stocks in a country for which the financial information available to U.S. investors is less than is needed to make fully-informed decisions; and (2) With the current stock price at a relatively high 9% below the nearest out-of-the-money strike price, the available bid/ask call options premium for the Apr2010 expiration is at $.05/$.10, which is well below this advisor's minimum threshold of $.20.

1. China Unicom (CHU) -- Closed
The transactions history for this completed position is as follows:
10/22/09 Bought 500 CHU @ $13.73
10/22/09 Sold 5 CHU Nov09 $15.00 Calls @ $.20
11/21/09 Nov09 Options Expired
11/23/09 Sold 5 CHU Dec09 $15.00 Calls @ $.15
12/19/09 Dec09 Options Expired
12/21/09 Sell-to-Open (STO) 5 CHU Jan2010 $12.50s @ $.40
Note: Price of CHU was $12.52 when these Jan2010 options were sold.
02/26/2010 Sell-to-Open (STO) 5 CHU Mar2010 $12.50s @ $.25
Note: Price of CHU was $12.10 when these Mar2010 options were sold.
03/20/2010 Mar2010 Options Expired
03/29/2010 Sold 500 CHU @ $11.46

The performance results (including commissions) for the CHU transactions were as follows:
Stock Purchase Cost: $6,873.95
= ($13.73*500+$8.95 commission)

Net Profit:
(a) Options Income: +$455.20
= 500*($.20+$.15+$.40+$.25) - 4*$11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Stock sold at $11.46): -$1,143.95
= ($11.46-$13.73)*500 - $8.95 commissions

Total Net Profit (Stock sold at $11.46): -$688.75
= (+$455.20 +$0.00 -$1,143.95)

Absolute Return (Stock sold at $11.46): -10.0%
= -$688.75/$6,873.95
Annualized Return: -23.1%
= (-$688.75/$6,873.95)*(365/158 days)

Establish InterDigital Inc. Covered Calls

A new covered calls position was established in the Covered Calls Advisor Portfolio(CCAP) with the purchase of InterDigital Inc.(IDCC) covered calls as follows:

Established InterDigital Inc.(IDCC) Covered Calls for Apr2010:
03/25/2010 Bought 200 IDCC @ $28.03
03/25/2010 Sold 2 IDCC Apr2010 $29.00 Calls @ $.50

InterDigital, Inc. designs and develops wireless digital technologies for use in 2G, 3G, and IEEE 802 related products. InterDigital now receives most of its revenue from royalties received from licenses and partnerships with semiconductor and mobile phone manufacturers. It currently has licenses covering 60% of 3G phones.

The Covered Calls Advisor established this position in InterDigital today upon completion of a thorough "Stock Selection Checklist" (See link) review. As shown in the Buy Alerts spreadsheet below, IDCC exceeds the Total Points threshold of 15.0 with a rating of 17.85. It is a high-growth company but with a very reasonable stock valuation. When first quarter earnings are announced in late April (note: a substantial increase in 1st quarter revenue guidance was recently announced), it is expected that based on the current price, the trailing twelve months P/E ratio will be below 10 -- which is substantially below IDCC's expected future growth rate.





















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


InterDigital's CEO has a comprehensive and visionary view of how IDCC can participate the burgeoning mobile internet industry. It will be offering a suite of technologies in response to impending bandwith growth challenges with product offerings in each area of what it terms as "bigger pipes, more pipes, and better pipes." It is targeting opportunities beyond mobile phones in the areas of netbooks, mobile internet, machine-to-machine, and consumer electronics. The company is well-positioned to deliver on these worldwide opportunities based on their: (1) existing relationships with many of the worlds leading wireless companies; (2) existing 3,000+ patents; (3) large number of current patent applications; (4) in-house engineering expertise; and (5) newly formed high-quality Technical Advisory Council.

Due to the rapid rate of change in the telecomm sector, this should be considered as a speculative investment. But IDCC is definitely an under-the-radar situation. Despite its $1.2 billion market cap, it is now covered by only four small-firm analysts. This is likely to change if IDCC is successful with its business growth plans as well as with its commitment to soon implement all necessary steps to enhance its corporate governance process.

Some possible overall performance results(including commissions) for the IDCC transactions would be as follows:
Stock Purchase Cost: $5,614.95
= ($28.03*200+$8.95 commission)

Net Profit:
(a) Options Income: +$89.55
= (200*$.50 - $10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $28.03):
-$8.95 = ($28.03-$28.03)*200 - $8.95 commissions
(c) Capital Appreciation (If exercised at $29.00): +$185.05
= ($29.00-$28.03)*200 - $8.95 commissions

Total Net Profit(If stock price unchanged at $28.03): +$80.60
= (+$89.55 +$0.00 -$8.95)
Total Net Profit(If stock price exercised at $29.00): +$274.60
= (+$89.55 +$0.00 +$185.05)

Absolute Return if Unchanged at $28.03: +1.4%
= +$80.60/$5,614.95
Annualized Return If Unchanged (ARIU) +22.8%
= (+$80.60/$5,614.95)*(365/23 days)

Absolute Return if Exercised at $29.00: +4.9%
= +$274.60/$5,614.95
Annualized Return If Exercised (ARIE) +77.6%
= (+$274.60/$5,614.95)*(365/23 days)

Aspen Insurance Holdings Ltd.(AHL) -- Closed

Last Friday was expiration Friday for February 2010. In a Covered Calls Advisor's blog recent post, it was noted that of the nine covered calls positions held until Mar2010 expiration, three were in-the-money at expiration and were therefore exercised and the stocks were called away, and six positions ended out-of-the-money. One of the out-of-the-money positions was in Aspen Insurance Holdings Ltd.(AHL). A decision was made today to sell the 300 shares owned in AHL, and the two primary reasons are: (1) The options liquidity in AHL for Apr2010 is low and with an associated relatively wide bid/ask spread; and (2) The implied volatility in the AHL options is now in the 15.0 area, which is lower than that required by this advisor to achieve a satisfactory options premium income. The transactions history for this completed position is as follows:

1. Aspen Insurance Holdings Ltd.(AHL) -- Closed
10/20/09 Bought 300 AHL @ $28.20
10/20/09 Sold 3 AHL Nov09 $30.00 Calls @ $.35
11/06/09 Ex-Dividend $45.00 = $.15*300 shares
11/21/09 Nov09 Options Expired
01/21/2010 Sell-to-Open (STO) 3 AHL Mar2010 $30.00s @ $.35
Note: The price of AHL was $27.78 when this call option sale was transacted
02/10/2010 Ex-Dividend $45.00 = $.15*300 shares
03/20/2010 Mar2010 Options Expired
03/24/2010 Sold 300 AHL @ $28.60

The performance results (including commissions) for the AHL transactions were:
Stock Purchase Cost: $8,468.95
= ($28.20*300+$8.95 commission)

Net Profit:
(a) Options Income: +$187.60
= (300*($.35+$.35) - 2*$11.20 commissions)
(b) Dividend Income: +$90.00 = 2*$.15*300 shares
(c) Capital Appreciation (Stock sold at $28.60): +$111.05
= ($28.60-$28.20)*300 - $8.95 commissions

Total Net Profit: +$388.65
= (+$187.60 +$90.00 +$111.05)

Absolute Return (Stock sold at $28.60): +4.6%
= +$388.65/$8,468.95
Annualized Return: +10.8%
= (+$388.65/$8,468.95)*(365/155 days)

Establish Hewlett-Packard Company Covered Calls

A new covered calls position was established in the Covered Calls Advisor Portfolio(CCAP) with the purchase of Hewlett-Packard Company (HPQ) covered calls as follows:

Established Hewlett-Packard Company(HPQ) Covered Calls for May2010:
03/24/2010 Bought 200 HPQ @ $52.90
03/24/2010 Sold 2 HPQ May2010 $55.00 Calls @ $.85

Note that the May2010 expiration was chosen instead of the near-month expiration of Apr2010. Normally, the Covered Calls Advisor sells the near-month expiration, but with HPQ currently priced at $52.90, the first out-of-the-money strike price is at $55.00 and its near-month (Mar2010) expiration was bid at only $.15. Since this advisor continues as "Slightly Bullish" per the "Overall Market Meter" and is even more bullish on the prospects for Hewlett-Packard's stock, selling out-of-the-money calls is preferred. So, a decision was made to extend to the May2010 expiration, thereby obtaining a more satisfactory $.85 call option premium. HPQ's next quarterly earnings release on May 17th is just prior to May2010 expiration, which is of some concern; but not sufficiently so to prevent this advisor from establishing this covered calls position.

Hewlett-Packard is a leading worldwide provider of personal computers, printers, and servers. With their 2008 acquisition of EDS they are now also a leading provider of information technology services. Their 2009 acquisition of 3Com is also viewed as a strategically savvy acquisition related to their network services offerings. The company has demonstrated continual improvement in its operating performance under the excellent leadership of CEO, Mark Hurd. Despite 2009's impressive stock performance, HPQ's financials and fundamental financial metrics remain attractive. With both stock advisory services used by the Covered Calls Advisor (Schwab Equity Ratings and MarketGrader.com) currently rating HPQ as a "Buy", and with this advisor's "Buy Alerts" spreadsheet (see below) total points above the threshold of 15.0 total points, it was decided to add HPQ to the CCAP at this time.





















Some possible overall performance results(including commissions) for the HPQ transactions would be as follows:
Stock Purchase Cost: $10,588.95
= ($52.90*200+$8.95 commission)

Net Profit:
(a) Options Income: +$159.55
= (200*$.85 - $10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $52.90):
-$8.95 = ($52.90-$52.90)*200 - $8.95 commissions
(c) Capital Appreciation (If exercised at $55.00): +$411.05
= ($55.00-$52.90)*200 - $8.95 commissions

Total Net Profit(If stock price unchanged at $52.90): +$150.60
= (+$159.55 +$0.00 -$8.95)
Total Net Profit(If stock price exercised at $55.00): +$570.60
= (+$159.55 +$0.00 +$411.05)

Absolute Return if Unchanged at $52.90: +1.4%
= +$150.60/$10,588.95
Annualized Return If Unchanged (ARIU) +8.8%
= (+$150.60/$10,588.95)*(365/59 days)

Absolute Return if Exercised at $55.00: +5.4%
= +$570.60/$10,588.95
Annualized Return If Exercised (ARIE) +33.3%
= (+$570.60/$10,588.95)*(365/59 days)

Establish Noble Corp. Covered Calls

An additional 300 shares of Noble Corp.(NE) were purchased today, which doubles the total investment in NE to 600 shares in the Covered Calls Advisor Portfolio(CCAP). A covered calls position was established by selling the Apr2010 $41.00 call options as follows:

Established Noble Corp.(NE) Covered Calls for Apr2010:
03/24/2010 Bought 300 NE @ $40.08
03/24/2010 Sold 3 NE Apr2010 $41.00 Calls @ $.80

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 on several key valuation metrics, including: (1) low P/E ratio relative to the past 20 years; (2) strong balance sheet with low and declining debt-to-capitalization; and a strong 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 senior management. 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. With oil priced in the $80 area, rig demand continues to improve -- and Noble is well positioned to benefit from increasing capital spending by major exploration and production companies, especially in Noble's focus area of deepwater rigs.

Two possible overall performance results (including commissions) for the NE transactions would be as follows:
Stock Purchase Cost: $12,032.95
= ($40.08*300+$8.95 commission)

Net Profit:
(a) Options Income: +$228.80
= (300*$.80 - $11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If NE price unchanged at $40.08):
-$8.95 = ($40.08-$40.08)*300 - $8.95 commissions
(c) Capital Appreciation (If NE exercised at $41.00): +$267.05
= ($41.00-$40.08)*300 - $8.95 commissions

Total Net Profit(If price unchanged at $40.08): +$219.85
= (+$228.80 +$0.00 -$8.95)
Total Net Profit(If NE exercised at $41.00): +$495.85
= (+$228.80 +$0.00 +$267.05)

Absolute Return if Unchanged at $40.08: +1.8%
= +$219.85/$12,032.95
Annualized Return If Unchanged (ARIU): +27.8%
= (+$219.85/$12,032.95)*(365/24 days)

Absolute Return if Exercised at $41.00: +4.1%
= +$495.85/$12,032.95
Annualized Return If Exercised (ARIE): +62.7%
= (+$495.85/$12,032.95)*(365/24 days)

Establish ProShares UltraShort 20+ Year Treasury ETF Covered Calls

A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of ProShares UltraShort 20+ Year Treasury ETF(TBT) covered calls as follows:

Established ProShares UltraShort 20+ Year Treasury ETF(TBT) Covered Calls for Oct09:
03/22/2010 Bought 300 TBT @ $46.81
03/22/2010 Sold 3 TBT Apr2010 $48.00 Calls @ $.45

TBT seeks daily investment results, before fees and expenses, which correspond to twice the inverse of the daily performance of the Barclays Capital 20+ Year U.S. Treasury index. The fund normally invests at least 80% of assets to investments that, in combination, have economic characteristics that are inverse to those of the index. It also typically invests in taking positions in financial instruments, including derivatives that should have similar daily return characteristics as twice the inverse of the index.

This advisor has done a lot of reading lately on the present factors impacting long-term interest rates and is convinced that the preponderance of the evidence supports a belief that a cyclical low in long-term interest rate yields is near. One important rationale is that Treasury Note and Bond issuances are very large, and the appetite of foreign countries, especially China and Japan, for continuing their aggressive purchasing at Treasury auctions has begun to subside. Also importantly, the Federal Reserve has recently announced that their purchases of mortgage-backed securities will cease at the end of this month. Moreover, with the Federal Funds Rate at 0%, the future direction of rates will undoubtedly be higher, despite the fact that the timing of this outcome is very unpredictable. Each of these trends, along with the exit from recession and now the beginnings of worldwide economic growth also portend a greater likelihood for higher Treasury Bond yields.

This ETF was mentioned by a participant during a monthly conference call of the Yahoo 'JustCoveredCalls' Group. After an appropriate amount of due diligence, it was determined that this would be a good way to establish a covered calls position that reflects this advisor's belief in the likelihood of higher treasury yields during the next few months. Some readers would ask: Why establish an out-of-the-money position in an inverse ETF instead of simply an in-the-money position in a direct investment (such as TLT)? In short, an out-of-the-money position in the inverse TBT ETF enables for the possibility of capital appreciation in the underlying ETF and thus a substantially higher potential return-on-investment than could be achieved from an in-the-money TLT position if interest rates do in fact trend slightly higher.

Two possible overall performance results (including commissions) for the TBT transactions would be as follows:
Stock Purchase Cost: $14,051.95
= ($46.81*300+$8.95 commission)

Net Profit:
(a) Options Income: +$123.80
= (300*$.45 - $11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If TBT price unchanged at $46.81):
-$8.95 = ($46.81-$46.81)*300 - $8.95 commissions
(c) Capital Appreciation (If TBT exercised at $48.00): +$348.05
= ($48.00-$46.81)*300 - $8.95 commissions

Total Net Profit(If price unchanged at $46.81): +$114.85
= (+$123.80 +$0.00 -$8.95)
Total Net Profit(If TBT exercised at $48.00): +$471.85
= (+$123.80 +$0.00 +$348.05)

Absolute Return if Unchanged at $46.81: +0.8%
= +$114.85/$14,051.95
Annualized Return If Unchanged (ARIU): +11.5%
= (+$114.85/$14,051.95)*(365/26 days)

Absolute Return if Exercised at $48.00: +3.4%
= +$471.85/$14,051.95
Annualized Return If Exercised (ARIE): +47.1%
= (+$471.85/$14,051.95)*(365/26 days)

Continuation Transaction -- Quanta Services Inc.

Last Friday was options expiration for March 2010. In a recent post on this Covered Calls Advisor's blog, it was noted that of the nine covered calls positions held until expiration for March 2010: (1) Three were in-the-money at expiration and were therefore exercised and the stocks were called away; and (2) Six positions ended out-of-the-money. Today, it was decided to retain one stock that ended out-of-the-money last Friday (Quanta Services Inc.) in the CCAP and to re-establish covered calls positions at the Apr2010 $20.00 strike price. Decisions regarding the remaining five equities currently held in the CCAP (to either sell them or to retain them and establish Apr2010 covered calls positions) will be made this week, and the associated transactions will be posted on this blog site on the same day they occur. A detailed explanations of the covered calls position established today for Quanta Services Inc. (PWR) is as follows:

1. Quanta Services Inc.(PWR) -- Continuation
The Covered Calls Advisor Portfolio(CCAP) position in Quanta Services Inc.(PWR) was out-of-the-money at Mar2010 expiration. Today it was decided to retain the 300 shares of Quanta Services and to establish a Apr2010 covered calls position as follows:

03/22/2010 Sell-to-Open (STO) 3 PWR Apr2010 $20.00s @ $.45

The transactions history to date for the covered calls position in PWR is as follows:
12/21/09 Bought 300 PWR @ $20.80
12/21/09 Sold 3 PWR Feb2010 $22.50 Calls @ $.50
02/20/2010 Feb2010 Options Expired
02/22/2010 Sell-to-Open (STO) 3 PWR Mar2010 $20.00s @ $.35
Note: Price of PWR was $19.20 today when the Mar2010 call options were sold.
Some possible overall performance results(including commissions) for the PWR transactions would be as follows:
Stock Purchase Cost: $6,248.95
= ($20.80*300+$8.95 commission)
03/20/2010 Mar2010 Options Expired
03/22/2010 Sell-to-Open (STO) 3 PWR Apr2010 $20.00s @ $.45
Note: Price of PWR was $19.72 today when the Apr2010 call options were sold.

Net Profit:
(a) Options Income: +$356.40
= (300*($.50 +$.35 +$.45) - 3*$11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $19.72):
-$332.95 = ($19.72-$20.80)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised at $20.00): -$248.95
= ($20.00-$20.80)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $19.72): +$23.45
= (+$356.40 +$0.00 -$332.95)
Total Net Profit(If stock price exercised at $20.00): +$107.45
= (+$356.40 +$0.00 -$248.95)

Absolute Return if Unchanged at $19.72: +0.4%
= +$23.45/$6,248.95
Annualized Return If Unchanged (ARIU) +1.2%
= (+$23.45/$6,248.95)*(365/117 days)

Absolute Return if Exercised at $20.00: +1.7%
= +$107.45/$6,248.95
Annualized Return If Exercised (ARIE) +5.4%
= (+$107.45/$6,248.95)*(365/117 days)

March 2010 Expiration Transactions

The Covered Calls Advisor Portfolio (CCAP) contained a total of twelve covered calls positions with March 2010 expirations, with the following results:

- During the week prior to expiration, in-the-money covered call positions in three equities [Apple Inc.(AAPL), Fluor Corp.(FLR), and Gap Inc.(GPS)] were rolled to Apr2010 expirations. These roll-out transactions were detailed in prior posts this week on this blog.

- Three positions (Amgen, iShares Brazil ETF, and Market Vectors Russia ETF) closed in-the-money. The calls were exercised and the equities were called away. The annualized percent return-on-investment(ROI) results for these three exercised positions were:

Amgen Inc.(AMGN): +26.9%
iShares MSCI Brazil ETF (EWZ): +5.6%
Market Vecotrs Russia ETF (RSX): +8.3%

- Six positions in the CCAP (AHL, CHU, FXI, NE, NOV, and PWR) ended out-of-the-money. Decisions will be made to either sell the equities, or to keep them and sell calls to establish Apr2010 covered call positions. The related transactions will be made this week and the actual transactions will be posted on this blog site on the same day they occur.

Detailed results for the three positions that were assigned (called away) upon Mar2010 expiration are as follows:

1. Amgen Inc.(AMGN) -- Closed
The transactions history was as follows:
10/22/09 Bought 200 AMGN @ $56.40
10/22/09 Sold 2 AMGN Nov09 $57.50 Calls @ $1.20
11/21/09 Nov09 Options Expired
11/23/09 Sell-to-Open (STO) 2 AMGN Dec09 $57.50s @ $.93
Note: Price of AMGN was $56.15 when the Dec09 options were sold.
12/19/09 Dec09 Options Expired
12/21/09 Sell-to-Open (STO) 2 AMGN Jan2010 $57.50s @ $1.14
Note: Price of AMGN was $56.80 when the Jan2010 options were sold.
01/16/2010 Jan2010 Options Expired
01/19/2010 Sell-to-Open (STO) 2 AMGN Feb2010 $57.50s @ $1.45
Note: Price of AMGN was $57.02 when the Feb2010 options were sold.
02/20/2010 Feb2010 Options Expired
03/03/2010 Sell-to-Open (STO) 2 AMGN Mar2010 $57.50s @ $.69
Note: Price of AMGN was $57.16 when the Mar2010 options were sold.
03/20/2010 Mar2010 Options Expired
Note: Price of AMGN was $60.00 upon Mar2010 expiration.

The overall performance results(including commissions) for the AMGN transactions were as follows:
Stock Purchase Cost: $11,288.95
= ($56.40*200+$8.95 commission)

Net Profit:
(a) Options Income: +$1,029.75
= (200*($1.20+$.93+$1.14+$1.45+$.69) - 5*$10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Stock exercised at $57.50): +$211.05
= ($57.50-$56.40)*200 - $8.95 commissions

Total Net Profit(If stock exercised at $57.50): +$1,240.80
= (+$1,029.75 +$0.00 +$211.05)

Absolute Return (Stock Exercised at $57.50): +11.0%
= (+$1,240.80/$11,288.95)
Annualized Return: +26.9%
= (+$1,240.80/$11,288.95)*(365/149 days)

2. iShares MSCI Brazil ETF (EWZ)
The transactions history was as follows:
12/21/09 Bought 200 EWZ @ $74.48
12/21/09 Sold 2 EWZ Jan2010 $76.00 Calls @ $1.67
01/16/2010 Jan2010 Options Expired
01/19/2010 Sell-to-Open (STO) 2 EWZ Feb2010 $76.00s @ $1.80
Note: Price of EWZ was $74.32 when the Feb2010 options were sold.
02/20/2010 Feb2010 Options Expired
03/01/2010 Sell-to-Open (STO) 2 EWZ Mar2010 $71.00s @ $1.23
Note: Price of EWZ was $69.42 when the Mar2010 options were sold.
03/20/2010 Mar2010 Options Expired
Note: Price of EWZ was $71.30 upon Mar2010 expiration.

The overall performance results(including commissions) for the EWZ transactions were as follows:
Stock Purchase Cost: $14,904.95
= ($74.48*200+$8.95 commission)

Net Profit:
(a) Options Income: +$908.65
= (200*($1.67+$1.80+$1.23) - 3*$10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If exercised at $71.00): -$704.95
= ($71.00-$74.48)*200 - $8.95 commissions

Total Net Profit(Stock exercised at $71.00): +$203.70
= (+$908.65 +$0.00 -$704.95)

Absolute Return (Stock Exercised at $71.00): +1.4%
= +$203.70/$14,904.95
Annualized Return: +5.6%
= (+$203.70/$14,904.95)*(365/89 days)

3. Market Vectors Russia ETF (RSX) -- Closed
The transactions history was as follows:
01/20/2010 Bought 300 RSX @ $33.68
01/20/2010 Sold 3 RSX Feb2010 $34.00 Calls @ $1.20
02/20/2010 Feb2010 Options Expired
03/01/2010 Sold 3 RSX Mar2010 $33.00 Calls @ $.45
Note: Price of RSX was $31.52 when the Mar2010 options were sold.
03/20/2010 Mar2010 Options Expired
Note: Price of RSX was $33.29 upon Mar2010 expiration.

The overall performance results(including commissions) for the RSX transactions were as follows:
Stock Purchase Cost: $10,112.95
= ($33.68*300+$8.95 commission)

Net Profit:
(a) Options Income: +$348.80
= (300*($1.20+$.45) - 2*$11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Stock exercised at $33.00): -$212.95
= ($33.00-$33.68)*300 - $8.95 commissions

Total Net Profit(Stock exercised at $33.00): +$135.85
= (+$348.80 +$0.00 -$212.95)

Absolute Return (Stock Exercised at $33.00): +1.3%
= +$135.85/$10,112.95
Annualized Return: +8.3%
= (+$135.85/$10,112.95)*(365/59 days)

Improving Stock Selection -- Use a Simple Checklist

It is said that we should "learn from our mistakes." This truism applies to all aspects of our lives, including our investing decisions. Although it is difficult to objectively analyze our investing mistakes, it is important to do so periodically with the intention of determining where we went wrong so that we are able to identify and implement appropriate corrective actions. The remainder of this article describes the Covered Calls Advisor's recent experience in this regard.

The single most important decision-making process for most investors (including us covered calls investors) is stock selection. The Covered Calls Advisor recently decided to identify those stocks purchased and subsequently sold during the past six months that had underperformed the Russell 3000 broad market benchmark. A quick analysis determined that of the 30 equities during this period, nineteen outperformed the benchmark and eleven underperformed. Of these eleven, five were especially weak selections in that their underperformance was more than 5% below that of the benchmark for the comparable time period.

These five worst performers became the focus for further analysis since they were definitely considered stock selection "mistakes." If the decision-making process used in each instance was analyzed objectively, would it be possible to pinpoint errors made and thus have an opportunity to "learn from these mistakes"? Fortunately, it soon became very apparent that the answer to this question was a definite "Yes".

The Covered Calls Advisor uses several sources of information and analytical methods to determine whether a particular company qualifies as a worthwhile investment. But in recent months, this advisor often failed to research the selected companies as fully as desired prior to their purchase. In other words, shortcuts were taken. This realization was particularly disconcerting since "discipline" is one of the five key characteristics specified in a prior article on this blog titled "Investing Pyramid of Success" (See "link ").

So how could the necessary discipline be defined to ensure that all necessary research methods in analyzing a potential stock investment would be consistently followed? The answer came from an unlikely source, a book titled "The Checklist Manifesto" (See "link"). The author, Dr. Atul Gawande, demonstrates how ordinary checklists have been used to significantly improve complex decision-making processes in diverse disciplines such as medicine, aerospace, and investing. The author explains how behavioral researchers have determined that there are two primary difficulties in complex decision-making:
(1) "the fallibility of human memory and attention, especially when it comes to mundane, routine matters that are easily overlooked under the strain of more pressing events"; and (2) "people can lull themselves into skipping steps even when they remember them."

To combat these difficulties, "checklists seem to provide protection against such failures. They remind us of the minimum necessary steps and make them explicit. They not only offer the possibility of verification but also instill a kind of discipline of higher performance." Checklists "catch mental flaws inherent in all of us -- flaws of memory and attention and thoroughness."

The two decision-making difficulties described above are an accurate reflection of this advisor's own difficulties. Putting the desired research steps into a checklist would certainly be a simple, effective tool to establish a more disciplined stock selection process. So, a step-by-step "Stock Selection Checklist" was developed and is as follows:

















The first two items on this checklist are presented other Covered Calls Advisor articles (see See Stock Selection post; and See Buy Alerts spreadsheet embedded within this post). While the other items are important for obtaining a comprehensive understanding of a particular company's investment potential, more detailed descriptions of these steps will not be provided at this time.

The specific items on the checklist are unique to the approach used by the Covered Calls Advisor. As a reader of this article, you are likely to use very different steps in your own analysis, and that is fine. But hopefully, you will now consider developing your own "Stock Selection Checklist" that itemizes the essential steps in your own investment decision-making process. Completing every step on the checklist prior to making a final investment decision is definitely a time-consuming process -- but it's worth it. Remember: Good stock selection is Job #1 for covered calls investors, and an essential quality for successful investing is discipline. An ordinary checklist provides a nice, simple framework for a consistent analytical approach and helps us to decrease the likelihood of making errors of omission. In short, using a checklist will provide the discipline necessary to reduce our stock selection mistakes and to improve our overall investing results.

Your comments or questions regarding the items on this checklist or anything else related to this article are certainly welcomed. Please click on the "comments" link below or email me at the address shown in the upper-right sidebar.

Regards and Godspeed to All,
Jeff

Roll Up and Out -- Apple Inc.

Today is expiration Friday for March 2010. A decision was made to retain Apple Inc. (AAPL) in the Covered Calls Advisor Portfolio and to roll-up-and-out to the Apr2010 expiration at the $230.00 strike price. With the time value remaining in the options at only $.02 [$12.20-($222.18-$210.00)], a roll-up-and-out debit spread transaction was executed today as follows:
03/19/2010 Buy-to-Close (BTC) 1 AAPL Mar2010 $210.00 @ $12.20
03/19/2010 Sell-to-Open (STO) 1 AAPL Apr2010 $230.00s @ $3.40
Note: Net Debit-Spread upon Roll-Up-and-Out was $8.80 ($12.20 - $3.40)

The transactions history to date for Apple Inc. (AAPL) is as follows:
02/24/2010 Bought 100 AAPL @ $198.677
02/24/2010 Sold 1 AAPL Mar2010 $210.00 Call @ $1.57
Roll-Up-and-Out Transaction:
03/19/2010 Buy-to-Close (BTC) 1 AAPL Mar2010 $210.00 @ $12.20
03/19/2010 Sell-to-Open (STO) 1 AAPL Apr2010 $230.00s @ $3.40
Note: The price of AAPL was $222.18 today when this debit-spread was transacted.

Two possible overall performance results(including commissions) for the Apple Inc. (AAPL) transactions would be as follows:
Stock Purchase Cost: $19,876.65
= ($198.677*100+$8.95 commission)

Net Profit:
(a) Options Income: -$742.40
= (100*($1.57-$12.20+$3.40) - 2*$9.70 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $222.18):
+$2,341.35 = ($222.18-$198.677)*100 - $8.95 commissions
(c) Capital Appreciation (If exercised at $230.00): +$3,123.35
= ($230.00-$198.677)*100 - $8.95 commissions

Total Net Profit(If stock price unchanged at $222.18): +$1,598.95
= (-$742.40 +$0.00 +$2,341.35)
Total Net Profit(If stock price exercised at $230.00): +$2,380.95
= (-$742.40 +$0.00 +$3,123.35)

Absolute Return if Unchanged at $222.18: +8.0%
= +$1,598.95/$19,876.65
Annualized Return If Unchanged (ARIU) +55.4%
= (+$1,598.95/$19,876.65)*(365/53 days)

Absolute Return if Exercised at $230.00: +12.0%
= +$2,380.95/$19,876.65
Annualized Return If Exercised (ARIE) +82.5%
= (+$2,380.95/$19,876.65)*(365/53 days)

Overall Market Meter Rating Remains "Slightly Bullish"

Each month during expiration week, the Covered Calls Advisor re-calculates each of the current values for the nine factors used to determine the "Overall Market Meter" rating. As shown in the chart below, the new Overall Market Meter Average rating (blue bar at the bottom of the chart) remains unchanged at "Slightly Bullish":
















As shown in the right sidebar, the covered calls investing strategy corresponding to this Slightly Bullish sentiment is to "on-average sell 2% out-of-the-money covered calls for the nearest expiration month." So as Mar2010 options expire this week, new positions for Apr2010 expiration will be established in accordance with this guideline.

For a more detailed explanation of each of the Covered Calls Advisor's nine indicators, please refer to this prior blog post on that topic -- link.

Your comments or questions regarding this post are welcomed. Please click on the "comments" link below or email me at the address shown in the upper-right sidebar.

Regards and Godspeed,
Jeff

Roll Out -- Fluor Corp.

The Covered Calls Advisor remains bullish on Fluor Corporation (FLR), so the decision was made to retain Fluor and to roll-out from the Mar2010 to the Apr2010 expiration at the $45.00 strike price. With a time value remaining in the Mar2010 $45.00 covered calls at only $.09 [$1.35-($46.26-$45.00)], a roll-out credit spread transaction was executed as follows:
03/17/2010 Buy-to-Close (BTC) 3 FLR Mar2010 $45.00s @ $1.35
03/17/2010 Sell-to-Open (STO) 3 FLR Apr2010 $45.00s @ $2.15
Note: Net Credit Spread upon Roll-Out was $.80 ($2.15 - $1.35)

The transactions history to date for Fluor Corp. (FLR) is as follows:
09/22/09 Bought 300 FLR @ $54.93
09/22/09 Sold 3 FLR Oct09 $55.00 Calls @ $1.95
10/17/09 Oct09 Options Expired
The closing price of FLR was $50.24 on expiration Friday.
10/19/09 Sell-to-Open (STO) 3 FLR Nov09 $55.00s @ $.95
The price of FLR was $51.57 today when this transaction was executed.
11/11/09 Buy-to-Close (BTC) 3 FLR Nov09 $55.00s @ $.05
11/11/09 Sell-to-Open (STO) 3 FLR Nov09 $45.00s @ $1.15
Note: Net Credit-Spread upon Roll-Down was $1.10 ($1.15 - $.05)
11/21/09 Nov09 Options Expired
The closing price of FLR was $44.19 on expiration Friday.
12/02/2009 Ex-Dividend $37.50 (.125*300 shares)
12/15/09 Sell-to-Open (STO) 3 FLR Jan2010 $45.00s @ $1.10
Note: The price of FLR was $43.10 today when this transaction was made.
01/16/2010 Jan2010 Options Expired
03/03/2010 Ex-Dividend $37.50 (.125*300 shares)
03/03/2010 Sell-to-Open (STO) 3 FLR Mar2010 $45.00s @ $.35
Note: Price of FLR was $43.26 when the Mar2010 options were sold.
03/17/2010 Buy-to-Close (BTC) 3 FLR Mar2010 $45.00s @ $1.35
03/17/2010 Sell-to-Open (STO) 3 FLR Apr2010 $45.00s @ $2.15
Note: Price of FLR was $46.26 when the Apr2010 credit-spread transaction occurred.

A possible overall performance result(including commissions) for the FLR transactions would be as follows:
Stock Purchase Cost: $16,487.95
= ($54.93*300+$8.95 commission)

Net Profit:
(a) Options Income: +$1,807.80
= (300*($1.95+$.95-$.05+$1.15+$1.10+$.35-$1.35+$2.15) - 6*$11.20 commissions)
(b) Dividend Income: +$75.00 =($.125*2)*300 shares
(c) Capital Appreciation (If exercised at $45.00): -$2,987.95
= ($45.00-$54.93)*300 - $8.95 commissions

Total Net Profit(If stock price exercised at $45.00): -$1,105.15
= (+$1,807.80 +$75.00 -$2,987.95)

Absolute Return if Exercised at $45.00: -6.7%
= -$1,105.15/$16,487.95
Annualized Return If Exercised (ARIE) -11.8%
= (-$1,105.15/$16,487.95)*(365/207 days)

Hewlett-Packard Company(HPQ) -- Closed by Early Exercise

This morning, the Covered Calls Advisor was notified that the 3 short calls were exercised, so the 300 HPQ shares were sold at the Mar2010 $50.00 strike price. This covered calls position was exercised early since HPQ goes ex-dividend on Monday with a $.08 quarterly dividend, and the time value remaining in the calls was less than $.05. The time value had compressed to a minimal amount since the stock was strongly in-the-money (HPQ at $52.36 versus a strike price of $50.00) and also with only one week remaining until Mar2010 expiration. This advisor was 100% fully covered with HPQ shares (as per the term "covered calls") and was pleased to have them called away early for a nice profit, as detailed below.

The Covered Calls Advisor will determine over the weekend whether to re-purchase HPQ on Monday and to re-establish a covered calls position for Apr2010 expiration, or to switch the cash proceeds from HPQ to a new covered calls position in a different company. Whatever the decision, the associated transactions will be posted on this blog early next week on the same day the new position is established.

Hewlett-Packard Company(HPQ) -- Closed:
The transactions history for the covered calls position in Hewlett-Packard Company(HPQ) was as follows:
01/22/2010 Bought 300 HPQ @ $49.71
01/25/2010 Sold 3 HPQ Feb2010 $50.00 Calls @ $1.62
Note: The price of HPQ was $50.19 when these call options were sold.
02/19/2010 Buy-to-Close(BTC) 3 HPQ Feb2010 $50.00s @ $.46
Note: The price of HPQ was $50.41 when these call options were closed out.
02/19/2010 Sell-to-Open(STO) 3 HPQ Mar2010 $50.00s @ $1.62
Note: The price of HPQ was $50.58 when these call options were sold.
03/12/2010 Mar2010 call options exercised early and 300 HPQ called away at $50.00

The overall performance results (including commissions) for the HPQ transactions were as follows:
Stock Purchase Cost: $14,921.95
= ($49.71*300+$8.95 commission)

Net Profit:
(a) Options Income: +$800.40
= [300*($1.62-$.46+$1.62) - 3*$11.20 commissions]
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Stock assigned at $50.00): +$78.05
= ($50.00-$49.71)*300 - $8.95 commissions

Total Net Profit(Stock assigned at $50.00): +$878.45
= (+$800.40 +$0.00 +$78.05)

Absolute Return (Stock assigned at $50.00): +5.9%
= +$878.45/$14,921.95
Annualized Return: +43.9%
= (+$902.45/$14,921.95)*(365/49 days)

Note: This 43.9% result is somewhat higher than the 38.7% that would have been achieved if the options had not been exercised early (and assuming the existing position would have captured the dividend next Monday and the stock would be called away next Friday upon Mar2010 expiration). So, and as is often the case, the higher annualized return-on-investment with the early exercise made it the preferable outcome.

Roll Up and Out -- Gap Inc. (GPS)

Today is one week prior to expiration Friday for March 2010. A decision was made to retain Gap Inc. (GPS) in the Covered Calls Advisor Portfolio and to roll-up-and-out to the Apr2010 expiration at the $23.00 strike price. With the current Mar2010 $20.00 covered calls more than 10% in-the-money (with GPS trading at $22.76), and since the time value remaining in the options was only $.04 [$2.80-($22.76-$20.00)], a roll-up-and-out debit spread transaction was executed as follows:
03/12/2010 Buy-to-Close (BTC) 3 GPS Mar2010 $20.00s @ $2.80
03/12/2010 Sell-to-Open (STO) 3 GPS Apr2010 $23.00s @ $.55
Note: Net Debit-Spread upon Roll-Up-and-Out was $2.25 ($2.80 - $.55)

Glenn Murphy (Gap's CEO) recent presentation at the BofA/Merrill Lynch Consumer Conference reinforced this advisor's belief in Mr. Murphy's capabilities and visionary leadership. He demonstrated a detailed understanding of Gap's financials and is clearly focused on cash flow metrics. His vision for the company's brand development initiatives, plans for domestic market share gains, and international growth plans is impressive and provides continued impetus for the Covered Calls Advisor's ongoing commitment to this investment in Gap Inc.

The transactions history to date for Gap Inc. (GPS) is as follows:
02/22/2010 Bought 300 GPS @ $19.76
02/22/2010 Sold 3 GPS Mar2010 $20.00 Calls @ $.60
Roll-Up-and-Out Transaction:
03/12/2010 Buy-to-Close (BTC) 3 GPS Mar2010 $20.00s @ $2.80
03/12/2010 Sell-to-Open (STO) 3 GPS Apr2010 $23.00s @ $.55
Note: The price of GPS was $22.76 today when this debit-spread was transacted and the remaining time value in the Mar2010 options was only $.04 [$2.80-($22.76-$20.00)].
04/05/2010 Ex-Dividend = $30.00 (300 shares*$.10)

Two possible overall performance results(including commissions) for the Gap Inc. (GPS) transactions would be as follows:
Stock Purchase Cost: $5,936.95
= ($19.76*300+$8.95 commission)

Net Profit:
(a) Options Income: -$517.40
= (300*($.60-$2.80+$.55) - 2*$11.20 commissions)
(b) Dividend Income: +$30.00 =(300 shares*$.10)
(c) Capital Appreciation (If stock price unchanged at $22.76):
+$891.05 = ($22.76-$19.76)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised at $23.00): +$963.05
= ($23.00-$19.76)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $22.76): +$403.65
= (-$517.40 +$30.00 +$891.05)
Total Net Profit(If stock price exercised at $23.00): +$475.65
= (-$517.40 +$30.00 +$963.05)

Absolute Return if Unchanged at $22.76: +6.8%
= +$403.65/$5,936.95
Annualized Return If Unchanged (ARIU) +46.0%
= (+$403.65/$5,936.95)*(365/54 days)

Absolute Return if Exercised at $23.00: +8.0%
= +$475.65/$5,936.95
Annualized Return If Exercised (ARIE) +54.2%
= (+$475.65/$5,936.95)*(365/54 days)

Multi Fineline Electronix (MFLX) -- Closed

Today, it was decided to close the covered calls position in Multi Fineline Electronix (MFLX) as follows:

1. Multi Fineline Electronix (MFLX) -- Closed
The transactions history to date for the covered calls position in Multi Fineline Electronix (MFLX) is as follows:
10/22/09 Bought 400 MFLX @ $27.50
10/22/09 Sold 4 MFLX Nov09 $30.00 Calls @ $.80
11/21/09 Nov09 Options Expired
12/03/09 Sell-to-Open (STO) 4 MFLX Feb2010 $30.00s @ $.95
Note: The price of MFLX was $26.29 today when this transaction was made.
02/20/2010 Feb2010 Options Expired
03/01/2010 Sell-to-Open (STO) 4 MFLX Mar2010 $22.50s @ $.60
Note: The price of MFLX was $22.35 today when this transaction was made.
03/10/2010 Buy-to-Close (BTC) 4 MFLX Mar2010 $22.50 Calls @ $2.50
03/10/2010 Sell 400 MFLX @ $24.99

The overall performance results(including commissions) for the MFLX transactions were as follows:
Stock Purchase Cost: $11,008.95
= ($27.50*400+$8.95 commission)

Net Profit:
(a) Options Income: -$107.80
= (400*($.80+$.95+$.60-$2.50) - 4*$11.95 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Stock sold at $24.99): -$1,012.95
= ($24.99-$27.50)*400 - $8.95 commissions

Total Net Profit(Stock sold at $24.99): -$1,120.75
= (-$107.80 +$0.00 -$1,012.95)

Absolute Return (Stock sold at $24.99): -10.2%
= -$1,120.75/$11,008.95
Annualized Return: -26.7%
= (-$1,164.80/$11,008.95)*(365/139 days)

Continuation Transaction -- Sohu.com Inc.

Today, the Covered Calls Advisor Portfolio(CCAP) established a covered calls position in Sohu.com Inc.(SOHU) by selling two Apr2010 options against the 200 shares owned in SOHU as follows:

03/05/2010 Sell-to-Open (STO) 2 SOHU Apr2010 $55.00s @ $1.05

Sohu.com's price performance has been disappointing since its purchase in the CCAP last October. However, SOHU had a substantial upside price move today, so the Covered Calls Advisor's open order to sell the SOHU Apr2010 $55.00s at $1.05 was executed today when the price of SOHU was at $51.37.

Normally, the Covered Calls Advisor sells the near-month expiration. But with Sohu.com currently priced at $51.37, the first out-of-the-money strike price is at $55.00 and its near-month (Mar2010) expiration was bid at only $.20. Since this advisor continues to be bullish on Sohu.com and thus prefers to sell out-of-the-money calls, a decision was made to extend to the Apr2010 expiration and obtain a more satisfactory $1.05 call option premium.


The transactions history to date for the covered calls position in SOHU is as follows:
10/16/09 Bought 200 SOHU @ $64.05
10/16/09 Sold 2 SOHU Nov09 $65.00 Calls @ $3.50
11/21/09 Nov09 Options Expired
11/23/09 Sell-to-Open (STO) 2 SOHU Dec09 $60.00s @ $.75
Note: Price of SOHU was $55.10 when the Dec09 options were sold.
12/19/09 Dec09 Options Expired
12/28/09 Sell-to-Open (STO) 2 SOHU Jan2010 $60.00s @ $.85
Note: Price of SOHU was $57.52 when the Jan2010 options were sold.
01/16/2010 Jan2010 Options Expired
01/19/2010 Sell-to-Open (STO) 2 SOHU Feb2010 $60.00s @ $3.10
Note: Price of SOHU was $60.37 when the Feb2010 options were sold.
02/20/2010 Feb2010 Options Expired
03/03/2010 Sell-to-Open (STO) 2 SOHU Apr2010 $55.00s @ $1.05
Note: Price of SOHU was $51.37 when the Apr2010 options were sold.


Two possible overall performance results(including commissions) for the SOHU transactions would be as follows:
Stock Purchase Cost: $12,818.95
= ($64.05*200+$8.95 commission)

Net Profit:
(a) Options Income: +$1,797.75
= (200*($3.50+$.75+$.85+$3.10+$1.05) - 5*$10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation(If stock price unchanged at $51.37): -$2,544.95
= ($51.37-$64.05)*200 - $8.95 commissions
(c) Capital Appreciation (If stock exercised at $55.00): -$1,818.95
= ($55.00-$64.05)*200 - $8.95 commissions

Total Net Profit(If stock price unchanged at $51.37): -$747.20
= (+$1,797.75 +$0.00 -$2,544.95)
Total Net Profit(If stock exercised at $55.00): -$21.20
= (+$1,797.75 +$0.00 -$1,818.95)

Absolute Return if Stock Price Unchanged at $51.37: -5.8%
= -$747.20/$12,818.95
Annualized Return If Unchanged (ARIU): -11.6%
= (-$747.20/$12,818.95)*(365/183 days)

Absolute Return if Stock Exercised at $57.50: -0.2%
= (-$21.20/$12,818.95)
Annualized Return If Exercised (ARIE): -0.3%
= (-$21.20/$12,818.95)*(365/183 days)

Continuation Transactions -- Amgen Inc. and Fluor Corporation

Today, the Covered Calls Advisor Portfolio(CCAP) established Mar2010 covered calls positions for current stock holdings in Amgen Inc. and Fluor Corporation, both for which prior Feb2010 covered calls had expired out-of-the-money. Details of the covered calls positions established today for AMGN and FLR are as follows:

1. Amgen Inc.(AMGN) -- Continuation

Today it was decided to retain the 200 shares of Amgen Inc.(AMGN) and to establish a Mar2010 covered calls position as follows:

03/03/2010 Sell-to-Open (STO) 2 AMGN Mar2010 $57.50s @ $.69

The transactions history to date for AMGN is as follows:
10/22/09 Bought 200 AMGN @ $56.40
10/22/09 Sold 2 AMGN Nov09 $57.50 Calls @ $1.20
11/21/09 Nov09 Options Expired
11/23/09 Sell-to-Open (STO) 2 AMGN Dec09 $57.50s @ $.93
Note: Price of AMGN was $56.15 when the Dec09 options were sold.
12/19/09 Dec09 Options Expired
12/21/09 Sell-to-Open (STO) 2 AMGN Jan2010 $57.50s @ $1.14
Note: Price of AMGN was $56.80 when the Jan2010 options were sold.
01/16/2010 Jan2010 Options Expired
01/19/2010 Sell-to-Open (STO) 2 AMGN Feb2010 $57.50s @ $1.45
Note: Price of AMGN was $57.02 when the Feb2010 options were sold.
02/20/2010 Feb2010 Options Expired
03/03/2010 Sell-to-Open (STO) 2 AMGN Mar2010 $57.50s @ $.69
Note: Price of AMGN was $57.16 when the Mar2010 options were sold.

Two possible overall performance results(including commissions) for the AMGN transactions would be as follows:
Stock Purchase Cost: $11,288.95
= ($56.40*200+$8.95 commission)

Net Profit:
(a) Options Income: +$1,029.75
= (200*($1.20+$.93+$1.14+$1.45+$.69) - 5*$10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation(If stock price unchanged at $57.16): +$143.05
= ($57.16-$56.40)*200 - $8.95 commissions
(c) Capital Appreciation (If stock exercised at $57.50): +$211.05
= ($57.50-$56.40)*200 - $8.95 commissions

Total Net Profit(If stock price unchanged at $57.16): +$1,172.80
= (+$1,029.75 +$0.00 +$143.05)
Total Net Profit(If stock exercised at $57.50): +$1,240.80
= (+$1,029.75 +$0.00 +$211.05)

Absolute Return if Stock Price Unchanged at $57.16: +10.4%
= +$1,172.80/$11,288.95
Annualized Return If Unchanged (ARIU): +25.4%
= (+$1,172.80/$11,288.95)*(365/149 days)

Absolute Return if Stock Exercised at $57.50: +11.0%
= (+$1,240.80/$11,288.95)
Annualized Return If Exercised (ARIE): +26.9%
= (+$1,240.80/$11,288.95)*(365/149 days)


2. Fluor Corporation (FLR) -- Continuation

Today it was decided to retain the 300 shares of Fluor Corporation (FLR) and to establish a Mar2010 covered calls position as follows:

03/03/2010 Sell-to-Open (STO) 3 FLR Mar2010 $45.00s @ $.35

The transactions history to date for FLR is as follows:
09/22/09 Bought 300 FLR @ $54.93
09/22/09 Sold 3 FLR Oct09 $55.00 Calls @ $1.95
10/17/09 Oct09 Options Expired
The closing price of FLR was $50.24 on expiration Friday.
10/19/09 Sell-to-Open (STO) 3 FLR Nov09 $55.00s @ $.95
The price of FLR was $51.57 today when this transaction was executed.
11/11/09 Buy-to-Close (BTC) 3 FLR Nov09 $55.00s @ $.05
11/11/09 Sell-to-Open (STO) 3 FLR Nov09 $45.00s @ $1.15
Note: Net Credit-Spread upon Roll-Down was $1.10 ($1.15 - $.05)
11/21/09 Nov09 Options Expired
The closing price of FLR was $44.19 on expiration Friday.
12/02/2009 Ex-Dividend $37.50 (.125*300 shares)
12/15/09 Sell-to-Open (STO) 3 FLR Jan2010 $45.00s @ $1.10
Note: The price of FLR was $43.10 today when this transaction was made.
01/16/2010 Jan2010 Options Expired
03/03/2010 Ex-Dividend $37.50 (.125*300 shares)
03/03/2010 Sell-to-Open (STO) 3 FLR Mar2010 $45.00s @ $.35
Note: Price of FLR was $43.26 when the Mar2010 options were sold.

Two possible overall performance results(including commissions) for the FLR transactions would be as follows:
Stock Purchase Cost: $16,487.95
= ($54.93*300+$8.95 commission)

Net Profit:
(a) Options Income: +$1,579.00
= (300*($1.95+$.95-$.05+$1.15+$1.10+$.35) - 5*$11.20 commissions)
(b) Dividend Income: +$75.00 =($.125*2)*300 shares
(c) Capital Appreciation (If stock price unchanged at $43.26): -$3,509.95
= ($43.26-$54.93)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised at $45.00): -$2,987.95
= ($45.00-$54.93)*300 - $8.95 commissions


Total Net Profit(If stock price unchanged at $43.26): -$1,855.95
= (+$1,579.00 +$75.00 -$3,509.95)
Total Net Profit(If stock price exercised at $45.00): -$1,333.95
= (+$1,579.00 +$75.00 -$2,987.95)

Absolute Return if Stock Price Unchanged at $43.26: -11.3%
= -$1,855.95/$16,487.95
Annualized Return If Stock Price Unchanged (ARIU): -23.0%
= (-$1,855.95/$16,487.95)*(365/179 days)

Absolute Return if Exercised at $45.00: -8.1%
= -$1,333.95/$16,487.95
Annualized Return If Exercised (ARIE) -16.5%
= (-$1,333.95/$16,487.95)*(365/179 days)

Continuation Transactions -- Six Positions

Today, the Covered Calls Advisor Portfolio(CCAP) established Mar2010 covered calls positions for six current holdings for which the Feb2010 covered calls had expired out-of-the-money. These six holdings are: iShares MSCI Brazil ETF(EWZ), iShares MSCI China ETF(FXI), Market Vectors Russia ETF(RSX), Multi Fineline Electronix(MFLX), National Oilwell Varco(NOV), and Noble Corporation(NE).

1. iShares MSCI Brazil ETF(EWZ) -- Continuation
The transactions history to date for the covered calls position in iShares MSCI Brazil ETF(EWZ) is as follows:
12/21/09 Bought 200 EWZ @ $74.48
12/21/09 Sold 2 EWZ Jan2010 $76.00 Calls @ $1.67
01/16/2010 Jan2010 Options Expired
01/19/2010 Sell-to-Open (STO) 2 EWZ Feb2010 $76.00s @ $1.80
Note: Price of EWZ was $74.32 when the Feb2010 options were sold.
02/20/2010 Feb2010 Options Expired
03/01/2010 Sell-to-Open (STO) 2 EWZ Mar2010 $71.00s @ $1.23
Note: Price of EWZ was $69.42 when the Mar2010 options were sold.

Two possible performance results (including commissions) for the EWZ transactions would be as follows:
Stock Purchase Cost: $14,904.95
= ($74.48*200+$8.95 commission)

Net Profit:
(a) Options Income: +$908.65
= (200*($1.67+$1.80+$1.23) - 3*$10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $69.42):
-$1,020.95 = ($69.42-$74.48)*200 - $8.95 commissions
(c) Capital Appreciation (If exercised at $71.00): -$704.95
= ($71.00-$74.48)*200 - $8.95 commissions

Total Net Profit(If stock price unchanged at $69.42): -$112.30
= (+$908.65 +$0.00 -$1,020.95)
Total Net Profit(If stock price exercised at $71.00): +$203.70
= (+$908.65 +$0.00 -$704.95)

Absolute Return if Unchanged at $69.42: -0.8%
= -$112.30/$14,904.95
Annualized Return If Unchanged (ARIU) -3.1%
= (-$112.30/$14,904.95)*(365/89 days)

Absolute Return if Exercised at $76.00: +1.4%
= +$203.70/$14,904.95
Annualized Return If Exercised (ARIE) +5.6%
= (+$203.70/$14,904.95)*(365/89 days)

2. iShares MSCI China ETF(FXI) -- Continuation
The transactions history to date for the covered calls position in iShares MSCI China ETF(FXI) is as follows:
11/18/09 Bought 600 FXI @ $45.54
11/18/09 Sold 6 FXI Dec09 $46.00 Calls @ $1.44
11/27/09 Bought 400 FXI @ $42.54
11/27/09 Sold 4 FXI Dec09 $44.00 Calls @ $1.13
12/19/09 Dec09 Options Expired
12/24/09 Sell-to-Open (STO) 10 FXI Jan2010 $43.00s @ $.63
Note: Price of FXI was $42.22 when the Jan2010 options were sold.
03/01/2010 Sell-to-Open (STO) 10 FXI Mar2010 $42.00s @.46
Note: Price of FXI was $40.54 when the Mar2010 options were sold.

Two possible performance results (including commissions) for the EWZ transactions would be as follows:
Stock Purchase Cost: $44,357.90
= ($45.54*600+$42.54*400+2*$8.95 commission)

Net Profit:
(a) Options Income: +$2,364.20
= (600*($1.44+$.63+$.46)+400*($1.13+$.63+$.46) - 4*$10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $40.54):
-$3,808.95 = [($40.54-$45.54)*600-($40.54-$42.54)*400] - $8.95 commissions
(c) Capital Appreciation (If exercised at $42.00): -$2,348.95
= [($42.00-$45.54)*600-($42.00-$42.54)*400] - $8.95 commissions

Total Net Profit(If stock price unchanged at $40.54): -$1,444.75
= (+$2,364.20 +$0.00 -$3,808.95)
Total Net Profit(If stock exercised at $42.00): +$15.25
= (+$2,364.20 +$0.00 -$2,348.95)

Absolute Return if Stock Price Unchanged at $40.54: -3.3%
= -$1,444.75/$44,357.90
Annualized Return If Unchanged (ARIU): -9.7%
= (-$1,444.75/$44,357.90)*(365/122 days)

Absolute Return if Stock Exercised at $42.00: +0.0%
= +$15.25/$44,357.90
Annualized Return If Exercised (ARIE): +0.1%
= (+$15.25/$44,357.90)*(365/122 days)

3. Market Vectors Russia ETF(RSX) -- Continuation
The transactions history to date for the covered calls position in the Market Vectors Russia ETF(RSX) is as follows:
01/20/2010 Bought 300 RSX @ $33.68
01/20/2010 Sold 3 RSX Feb2010 $34.00 Calls @ $1.20
02/20/2010 Feb2010 Options Expired
03/01/2010 Sold 3 RSX Mar2010 $33.00 Calls @ $.45
Note: Price of RSX was $31.52 when the Mar2010 options were sold.

Two possible performance results (including commissions) for the RSX transactions would be as follows:
Stock Purchase Cost: $10,112.95
= ($33.68*300+$8.95 commission)

Net Profit:
(a) Options Income: +$348.80
= (300*($1.20+$.45) - 2*$11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $31.52):
-$656.95 = ($31.52-$33.68)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised at $33.00): -$212.95
= ($33.00-$33.68)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $31.52): -$308.15
= (+$348.80 +$0.00 -$656.95)
Total Net Profit(If stock price exercised at $33.00): +$135.85
= (+$348.80 +$0.00 -$212.95)

Absolute Return if Unchanged at $31.52: -3.0%
= -$308.15/$10,112.95
Annualized Return If Unchanged (ARIU) -18.9%
= (-$308.15/$10,112.95)*(365/59 days)

Absolute Return if Exercised at $34.00: +1.3%
= +$135.85/$10,112.95
Annualized Return If Exercised (ARIE) +8.3%
= (+$135.85/$10,112.95)*(365/59 days)

4. Multi Fineline Electronix (MFLX) -- Continuation
The transactions history to date for the covered calls position in Multi Fineline Electronix (MFLX) is as follows:
10/22/09 Bought 400 MFLX @ $27.50
10/22/09 Sold 4 MFLX Nov09 $30.00 Calls @ $.80
11/21/09 Nov09 Options Expired
12/03/09 Sell-to-Open (STO) 4 MFLX Feb2010 $30.00s @ $.95
Note: The price of MFLX was $26.29 today when this transaction was made.
02/20/2010 Feb2010 Options Expired
03/01/2010 Sell-to-Open (STO) 4 MFLX Mar2010 $22.50s @ $.60
Note: The price of MFLX was $22.35 today when this transaction was made.

Two possible performance results (including commissions) for the MFLX transactions would be as follows:
Stock Purchase Cost: $11,008.95
= ($27.50*400+$8.95 commission)

Net Profit:
(a) Options Income: +$904.15
= (400*($.80+$.95+$.60) - 3*$11.95 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation(If stock price unchanged from current $22.35): -$2,068.95
= ($22.35-$27.50)*400 - $8.95 commissions
(c) Capital Appreciation (If stock exercised at $22.50): -$2,008.95
= ($22.50-$27.50)*400 - $8.95 commissions

Total Net Profit(If stock price unchanged at $22.35): -$1,164.80
= (+$904.15 +$0.00 -$2,068.95)
Total Net Profit(If stock exercised at $22.50): +$1,104.80
= (+$904.15 +$0.00 -$2,008.95)

Absolute Return if Stock Price Unchanged at $22.35: -10.6%
= -$1,164.80/$11,008.95
Annualized Return If Unchanged (ARIU): -25.9%
= (-$1,164.80/$11,008.95)*(365/149 days)

Absolute Return if Stock Exercised at $22.50: -10.0%
= -$1,104.80/$11,008.95
Annualized Return If Exercised (ARIE): -24.6%
= (-$1,104.80/$11,008.95)*(365/149 days)

5. National Oilwell Varco(NOV) -- Continuation
The transactions history to date for the covered calls position in National Oilwell Varco(NOV) is as follows:
01/20/2010 Bought 300 NOV @ $45.80
01/20/2010 Sold 3 NOV Feb2010 $46.00 Calls @ $1.75
02/20/2010 Feb2010 Options Expired
03/01/2010 Sold 3 NOV Mar2010 $44.00 Calls @ $.95
Note: The price of NOV was $43.55 today when these Mar2010 options were sold.

Two possible performance results (including commissions) for the NOV transactions would be as follows:
Stock Purchase Cost: $13,748.95
= ($45.80*300+$8.95 commission)

Net Profit:
(a) Options Income: +$787.60
= (300*($1.75+$.95) - 2*$11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $43.55):
-$683.95 = ($43.55-$45.80)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised at $44.00): -$548.95
= ($44.00-$45.80)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $43.55): -$103.65
= (+$787.60 +$0.00 -$683.95)
Total Net Profit(If stock price exercised at $44.00): +$238.65
= (+$787.60 +$0.00 -$548.95)

Absolute Return if Unchanged at $43.55: -0.8%
= -$103.65/$13,748.95
Annualized Return If Unchanged (ARIU) -4.7%
= (-$103.65/$13,748.95)*(365/59 days)

Absolute Return if Exercised at $44.00: +1.7%
= +$238.65/$13,748.95
Annualized Return If Exercised (ARIE) +10.7%
= (+$238.65/$13,748.95)*(365/59 days)

6. Noble Corporation (NE) -- Continuation
The transactions history to date for the covered calls position in Noble Corporation (NE) 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)].
Roll-Up-and-Out Transaction:
10/16/09 Buy-to-Close (BTC) 3 NE Oct09 $36.00s @ $5.60
10/16/09 Sell-to-Open (STO) 3 NE Nov09 $42.00s @ $1.75
Note: The price of NE was $41.56 today when this transaction occurred.
11/05/09 Ex-Dividend = $14.70 (300 shares*$.049)
11/21/09 Nov09 Options Expired
11/23/09 Sell-to-Open (STO) 3 NE Dec09 $42.00s @ $1.45
Note: Price of NE was $41.30 when the Dec09 options were sold.
12/19/09 Dec09 Options Expired
12/21/09 Sell-to-Open (STO) 3 NE Jan2010 $43.00s @ $.90
Note: Price of NE was $41.75 when the Jan2010 options were sold.
01/15/2010 Buy-to-Close (BTC) 3 NE Jan2010 $43.00s @ $.70
01/15/2010 Sell-to-Open (STO) 3 NE Feb2010 $45.00s @ $1.30
Note: Price of NE was $43.67 when the Feb2010 options were sold.
02/20/2010 Feb2010 Options Expired
03/01/2010 Sold 3 NE Mar2010 $44.00 Calls @ $.60
Note: The price of NE was $42.84 today when these Mar2010 options were sold.

Some possible overall performance results(including commissions) for the NE transactions would be as follows:
Stock Purchase Cost: $10,202.95
($33.98*300+$8.95 commission)

Net Profit:
(a) Options Income: -$183.40
= (300*($1.30-$5.22+$3.87-$5.60+$1.75+$1.45+$.90-$.70+$1.30+$.60) - 7*$11.20 commissions)
(b) Dividend Income: +$14.70
(c) Capital Appreciation (If stock price unchanged at $42.84): +$2,649.05
= ($42.84-$33.98)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised at $44.00): +$2,997.05
= ($44.00-$33.98)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $42.84): +$2,480.35
= (-$183.40 +$14.70 +$2,649.05)
Total Net Profit(If stock price exercised at $44.00): +$2,828.35
= (-$183.40 +$14.70 +$2,997.05)

Absolute Return if Stock Price Unchanged at $42.84: +24.3%
= +$2,480.35/$10,202.95
Annualized Return If Unchanged (ARIU) +44.6%
= (+$2,480.35/$10,202.95)*(365/199 days)

Absolute Return if Exercised at $45.00: +27.7%
= +$2,828.35/$10,202.95
Annualized Return If Exercised (ARIE) +50.8%
= (+$2,828.35/$10,202.95)*(365/199 days)