Returns -- Through May 2010

1. May 2010 Year-to-Date Results:

As shown in the table below, the Covered Calls Advisor Portfolio (CCAP) has underperformed the Russell 3000 benchmark by 7.34 percentage points [-7.94%-(-0.60%)] so far in 2010:












CCAP Absolute Return (Jan 1st through May 31st, 2010) = -7.94%
($253,617.82-$275,491.90)/$275,491.90

Benchmark Russell 3000(IWV) Absolute Return(Jan 1st through May 31st, 2010) = -0.60%
($64.89-$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 primary difference between the two accounts is the total number of shares held for each equity. This approach is used to preserve the confidentiality of the total value of the Covered Call Advisor's personal portfolio.

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. June 2010 covered call positions will be established this week and the associated transactions will be posted on this blog site on the same day they occur.

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.

Jeff

Establish Symantec Corp. Covered Calls

A new covered call position was established today in the Covered Calls Advisor Portfolio(CCAP) with Symantec Corp.(SYMC) as follows:

05/24/2010 Bought 400 SYMC @ $14.51
05/24/2010 Sold 4 SYMC Jun2010 $15.00 Call Options @ $.48

Symantec Corporation is a leading software provider of security, storage, and systems management solutions that enable companies and consumers to protect their network infrastructure from security threats. It operates in four segments: Consumer, Security and Compliance, Storage and Server Management, and Services. The Consumer segment provides consumer security software suites and services, primarily under the Norton AntiVirus Software brand which currently has a 53% market share in this segment. The Security and Compliance segment provides software solutions for enterprise security, endpoint management, and archiving applications. The Storage and Server Management segment focuses on providing storage management, high availability, and backup and recovery solutions in heterogeneous storage and server platforms to enterprise customers. The Services segment offers consulting services, which include advisory, product enablement, and residency services to enable customers to assess, design, transform, and operate their infrastructure. In addition, it offers maintenance support contracts, including content, upgrades, and technical support to enterprises; and self-help online services, phone, chat, email support, and fee-based premium support and diagnostic services to consumers. The company markets and sells its products through distributors, retailers, direct marketers, Internet-based resellers, original equipment manufacturers, system builders, and Internet service providers; and its e-commerce channels, as well as direct sales force, value-added and large account resellers, and system integrators. It has operations in the Americas, which includes the United States, Canada, and Latin America; EMEA that comprise Europe, the Middle East, and Africa; and the Asia Pacific-Japan. Symantec Corporation was founded in 1982 and is headquartered in Cupertino, California.

The Covered Calls Advisor's "Buy Alerts" spreadsheet below shows that the total points of 15.14 exceeds the minimum purchase threshold of 15 points for a new investment.





















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


Two possible overall performance results(including commissions) for the SYMC transactions would be as follows:
Stock Purchase Cost: $5,812.95
= ($14.51*400+$8.95 commission)

Net Profit:
(a) Options Income: +$180.05
= 400*$.48 - $11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $14.51):
-$8.95 = ($14.51-$14.51)*400 - $8.95 commissions
(c) Capital Appreciation (If exercised at $15.00): +$187.05
= ($15.00-$14.51)*400 - $8.95 commissions

Total Net Profit(If stock price unchanged at $14.51): +$171.10
= (+$180.05 +$0.00 -$8.95)
Total Net Profit(If stock price exercised at $15.00): +$367.10
= (+$180.05 +$0.00 +$187.05)

Absolute Return if Unchanged at $14.51: +2.9%
= +$171.10/$5,812.95
Annualized Return If Unchanged (ARIU) +41.3%
= (+$171.10/$5,812.95)*(365/26 days)

Absolute Return if Exercised at $15.00: +6.3%
= +$367.10/$5,812.95
Annualized Return If Exercised (ARIE) +88.7%
= (+$367.10/$5,812.95)*(365/26 days)

Downside Breakeven Price Point: $14.03
Downside Breakeven Protection: 3.3%

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":
















The current Overall Market Meter method has been utilized and has registered as "Slightly Bullish" since it was introduced on Dec. 20th, 2009. In the 5 months from 12/20/2009 to the present, the Russell 3000 benchmark has increased by 7.1%.

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 with the current May2010 options expiration, new positions for Jun2010 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

May 2010 Expiration Transactions

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

- One position (Quanta Services Inc.) closed in-the-money. The calls were exercised and the 300 shares of PWR stock were called away. The annualized percent return-on-investment(ROI) results for this exercised position was +12.3%.

- Fourteen positions in the CCAP (AAPL, FLR, GPS, FXI, HPQ, IDCC, EEM, TNDM, NE, PKG, PWRD, POT, TBT, and SOHU) ended out-of-the-money. Decisions will be made to either sell the equities, or to keep them and sell calls to establish Jun2010 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 Quanta Services position that was assigned (called away) upon May2010 expiration are as follows:

1. Quanta Services Inc.(PWR) -- Closed
The transactions history was 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.
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.
04/17/2010 Apr2010 Options Expired
04/21/2010 Sell-to-Open (STO) 3 PWR May2010 $20.00s @ $.75
Note: Price of PWR was $20.15 when the May2010 options were sold.
5/22/2010 300 shares of PWR were in-the-money and the shares were called away (assigned) at $20.00. Note: The closing price of PWR was $21.12 on expiration Friday.

The overall performance results(including commissions) for the PWR transactions were as follows:

Stock Purchase Cost: $6,248.95
($20.80*300+$8.95 commission)

Net Profit:
(a) Options Income: +$570.20
= (300*($.50 +$.35 +$.45+$.75) - 4*$11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Stock assigned at $20.00): -$248.95
= ($20.00-$20.80)*300 - $8.95 commissions

Total Net Profit(Stock assigned at $20.00): +$321.25
= (+$570.20 +$0.00 -$248.95)

Absolute Return (Stock assigned at $20.00): +5.1%
= +$321.25/$6,248.95
Annualized Return: +12.3%
= (+$321.25/$6,248.95)*(365/152 days)

Establish Intel Corp. Covered Calls

A new covered call position was established today in the Covered Calls Advisor Portfolio(CCAP) with Intel Corp.(INTC) as follows:

05/21/2010 Bought 300 INTC @ $20.30
05/21/2010 Sold 3 INTC Jun2010 $22.00 Call Options @ $.52
The purchase transaction was made very soon after the market opened and the options sale was made about 30 minutes later when the stock had risen and was trading at $20.82.

Intel Corp.(INTC) is the world's leading semiconductor producer and has been the industry leader since the inception of the personal computer. Intel produces products for many facets of advanced technology including flash memory products, motherboards, wired and wireless connectivity products and networked storage products. Its 2009 annual sales exceeded $35 billion and should approximate $40 billion this year. This sales increase coupled with an operating margin approaching 62% should enable Intel to achieve all-time record earnings per share approaching $2.00 in 2011. Applying a P/E of 13 (historically low for Intel) against these earnings implies a very reasonable target price potential of $26, which represents an attractive 28% annualized return potential for the underlying stock over the next year.

The Covered Calls Advisor's "Buy Alerts" spreadsheet below shows that the total points of 17.14 is well above the desired threshold of 15 points for a new investment.





















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


Two possible overall performance results(including commissions) for the INTC transactions would be as follows:
Stock Purchase Cost: $6,098.95
= ($20.30*300+$8.95 commission)

Net Profit:
(a) Options Income: +$144.80
= 300*$.52 - $11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $20.30):
-$8.95 = ($20.30-$20.30)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised at $22.00): +$501.05
= ($22.00-$20.30)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $20.30): +$135.85
= (+$144.80 +$0.00 -$8.95)
Total Net Profit(If stock price exercised at $22.00): +$645.85
= (+$144.80 +$0.00 +$501.05)

Absolute Return if Unchanged at $20.30: +2.2%
= +$135.85/$6,098.95
Annualized Return If Unchanged (ARIU) +28.0%
= (+$135.85/$6,098.95)*(365/29 days)

Absolute Return if Exercised at $22.00: +10.6%
= +$645.85/$6,098.95
Annualized Return If Exercised (ARIE) +133.3%
= (+$645.85/$6,098.95)*(365/29 days)

Downside Breakeven Price Point: $19.78
Downside Breakeven Protection: 2.6%

Returns -- Through April 2010

1. April 2010 Year-to-Date Results:

As shown in the table below, the Covered Calls Advisor Portfolio (CCAP) has underperformed the Russell 3000 benchmark by 6.49 percentage points (+1.25%-7.74%) so far in 2010:











CCAP Absolute Return (Jan 1st through April 30th, 2010) = +1.25%
($278,935.52-$275,491.90)/$275,491.90

Benchmark Russell 3000(IWV) Absolute Return(Jan 1st through April 30th,2010) = +7.74%
($70.33-$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 May2010).

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