Establish Cubist Pharmaceuticals Covered Calls

A new covered calls position was established in the Covered Calls Advisor Portfolio(CCAP) with the purchase of Cubist Pharmaceuticals (CBST) covered calls as follows:

Established Cubist Pharmaceuticals (CBST) Covered Calls for Jul2010:
06/25/2010 Bought 300 CBST @ $21.31
06/25/2010 Sold 3 CBST Jul2010 $22.50 Calls @ $.50

Cubist Pharmaceuticals, Inc. operates as a biopharmaceutical company focused on the research, development, and commercialization of pharmaceutical products that address unmet medical needs in the acute care environment. The company markets CUBICIN (daptomycin for injection), the first antibiotic in a new class of anti-infectives called lipopeptides in the United States. It also promotes MERREM I.V. (meropenem for injection) in the U.S. under an agreement with AstraZeneca Pharmaceuticals, LP. The company's clinical product pipeline consists of ecallantide, a recombinant human protein being developed for the reduction of blood loss during cardiac surgery, for which Phase 2 data is under analysis; a Phase 2 program focused on the development of a novel cephalosporin to address certain serious infections caused by multi-drug resistant (MDR) Gram-negative organisms; a program for the treatment of CDAD (Clostridium difficile-associated diarrhea), which is entering Phase 2; and a Phase 1 program to address the unmet medical need for a treatment for serious infections caused by MDR Gram-negative pathogens. Cubist Pharmaceuticals is also working on various pre-clinical programs, including an anti-infective program for the treatment of respiratory syncytial virus (RSV) in children, therapies to treat various serious bacterial infections, and agents to treat acute pain. It has a collaboration agreement with Alnylam Pharmaceuticals, Inc. for developing Alnylam's RNA interference to treat RSV. The company was founded in 1992 and is headquartered in Lexington, Massachusetts.

Cubist is ranked as a "Buy" by both of the stock advisory services used by the Covered Calls Advisor, namely Schwab Equity Research and MarketGrader.com. The Buy Alerts spreadsheet below shows that CBST's financials are very attractive at this time, and the total points rating of 18.16 is well above the Covered Calls Advisor's desired "Buy" threshold of 15.0.





















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


Some possible overall performance results(including commissions) for the CBST transactions would be as follows:
Stock Purchase Cost: $6,401.95
= ($21.31*300+$8.95 commission)

Net Profit:
(a) Options Income: +$138.80
= (300*$.50 - $11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $21.31):
-$8.95 = ($21.31-$21.31)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised at $22.50): +$348.05
= ($22.50-$21.31)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $21.31): +$129.85
= (+$138.80 +$0.00 -$8.95)
Total Net Profit(If stock price exercised at $22.50): +$486.85
= (+$138.80 +$0.00 +$348.05)

Absolute Return if Unchanged at $21.31: +2.0%
= +$129.85/$6,401.95
Annualized Return If Unchanged (ARIU) +33.7%
= (+$129.85/$6,401.95)*(365/22 days)

Absolute Return if Exercised at $22.50: +7.6%
= +$486.85/$6,401.95
Annualized Return If Exercised (ARIE) +126.2%
= (+$486.85/$6,401.95)*(365/22 days)

Establish Covered Calls in Best Buy, Domtar Corp, and Symantec Corp

With a portion of the cash received from the four positions that were in-the-money and therefore called away last Friday upon Jun2010 expiration, three new covered calls positions were established today. For each of these three positions, the Covered Calls Advisor believes that a strong case can be made that they are temporarily undervalued now and that each has a reasonably good chance of being 40%+ higher by this time next year.

1. Best Buy Co. Inc. (BBY) -- Covered Calls Established
A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of Best Buy Co. Inc. (BBY) covered calls as follows:
Established Best Buy Co. Inc. (BBY) Covered Calls for Jul2010:
06/23/2010 Bought 400 BBY @ $36.08
06/23/2010 Sold 4 BBY Jul2010 $37.00 Calls @ $.82

Best Buy is the leading consumer electronics retailer in the U.S. and also in the relatively early stages of its international expansion plans. It operates 1,069 Best Buy stores, 74 Best Buy Mobile stand-alone stores, 35 Pacific Sales showrooms, eight Magnolia Audio Video stores and six Geek Squad stand-alone stores in the U.S. BBY also operated 887 Carphone
Warehouse and 1,566 The Phone House Stores in Europe, 208 stores in Canada, and 164 stores in China. U.S. Best Buy stores average approximately 39,000 retail square feet, and offer products in six revenue categories: consumer electronics (39% of revenues), home office (34%), entertainment software (16%), appliances (4%), services (6%), and other (1%). Best Buy's largest category, consumer electronics, includes products such as televisions, digital cameras and accessories, digital camcorders and accessories, e-readers, DVD players, MP3 players and accessories, musical instruments, navigation products, home theater audio systems and components, and mobile electronics including car stereo and satellite radio products. Best Buy stock price has declined substantially recently because of its quarterly earnings disappointment. This advisor believes this decline is an overreaction given that management reiterated their current year earnings guidance at $3.45 to $3.60. At today's purchase price of $36.08, this is a P/E ratio of less than 12 which is the lowest P/E level for BBY in the last decade, a good value-oriented entry point for this position.

Two possible overall performance results(including commissions) for the BBY transactions would be as follows:
Stock Purchase Cost: $14,440.95
= ($36.08*400+$8.95 commission)

Net Profit:
(a) Options Income: +$339.95
= (400*$.82 - $11.95 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If BBY unchanged at $36.08): $-8.95
= ($36.08-$36.08)*400 - $8.95 commissions
(c) Capital Appreciation (If BBY assigned at $37.00): +$359.05
= ($37.00-$36.08)*400 - $8.95 commissions

Total Net Profit(If BBY price unchanged at $36.08): +$331.00
= (+$339.95 +$0.00 -$8.95)
Total Net Profit(If BBY assigned at $37.00): +$699.00
= (+$339.95 +$0.00 +$359.05)

Absolute Return (If BBY unchanged at $36.08): +2.3%
= +$331.00/$14,440.95
Annualized Return If Unchanged (ARIU): +34.9%
= (+$331.00/$14,440.95)*(365/24 days)

Absolute Return if Exercised at $37.00: +4.8%
= +$699.00/$14,440.95
Annualized Return If Exercised (ARIE): +73.6%
= (+$699.00/$14,440.95)*(365/24 days)

2. Domtar Corp.(UFS) -- Covered Calls Established
A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of Domtar Corp.(UFS) covered calls as follows:
Established Domtar Corp.(UFS) Covered Calls for Jul2010:
06/23/2010 Bought 400 UFS @ $55.10
06/23/2010 Sold 4 UFS Jul2010 $60.00 Calls @ $1.10

Domtar Corporation was formed on August 16, 2006, for the purpose of combining
the fine paper assets of Weyerhaeuser with those of Domtar Inc. The company is now the largest integrated manufacturer of uncoated freesheet paper in North America and the second largest in the world with about global 34% market share. The company also
makes papergrade, fluff and specialty pulp, lumber and wood products, and manages forestland. Approximately 81% of the company's revenues were generated from the sale of pulp and paper, 15% came from paper distribution, and 4% was from the sale of lumber and wood products. In uncoated freesheet, Domtar has 10 pulp and paper mills in operation (eight in the U.S. and two in Canada) with annual production capacity of
3.9 million tons of uncoated freesheet, 1.9 million tons of market pulp and 238,000 tons of coated groundwood.

The Buy Alerts spreadsheet below shows that Domtar earns a total points of 16.98, well above the minimum threshold of 15.0:





















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


Two possible overall performance results(including commissions) for the UFS transactions would be as follows:
Stock Purchase Cost: $22,048.95
= ($55.10*400+$8.95 commission)

Net Profit:
(a) Options Income: +$428.05
= (400*$1.10 - $11.95 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If UFS unchanged at $55.10): $-8.95
= ($55.10-$55.10)*400 - $8.95 commissions
(c) Capital Appreciation (If UFS assigned at $60.00): +$1,951.05
= ($60.00-$55.10)*400 - $8.95 commissions

Total Net Profit(If UFS price unchanged at $55.10): +$419.10
= (+$428.05 +$0.00 -$8.95)
Total Net Profit(If UFS assigned at $60.00): +$2,379.10
= (+$428.05 +$0.00 +$1,951.05)

Absolute Return (If UFS unchanged at $55.10): +1.9%
= +$428.05/$22,048.95
Annualized Return If Unchanged (ARIU): +29.5%
= (+$428.05/$22,048.95)*(365/24 days)

Absolute Return if Exercised at $60.00: +10.8%
= +$2,379.10/$22,048.95
Annualized Return If Exercised (ARIE): +164.1%
= (+$2,379.10/$22,048.95)*(365/24 days)

3. Symantec Corp. -- Covered Calls Established
A new covered call position was established today in the Covered Calls Advisor Portfolio(CCAP) with Symantec Corp.(SYMC). A similar covered calls position in SYMC with a Jun2010 expiration and a $15.00 strike price was called away at expiration. With the price of SYMC back below $15.00 today, a covered calls position was established as follows:
06/23/2010 Bought 300 SYMC @ $14.70
06/23/2010 Sold 3 SYMC Jul2010 $15.00 Call Options @ $.31

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: $4,418.95
= ($14.70*300+$8.95 commission)

Net Profit:
(a) Options Income: +$81.80
= 300*$.31 - $11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $14.70):
-$8.95 = ($14.70-$14.70)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised at $15.00): +$81.05
= ($15.00-$14.70)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $14.70): +$72.85
= (+$81.80 +$0.00 -$8.95)
Total Net Profit(If stock price exercised at $15.00): +$162.85
= (+$81.80 +$0.00 +$81.05)

Absolute Return if Unchanged at $14.70: +1.6%
= +$72.85/$4,418.95
Annualized Return If Unchanged (ARIU) +25.1%
= (+$72.85/$4,418.95)*(365/24 days)

Absolute Return if Exercised at $15.00: +3.7%
= +$162.85/$4,418.95
Annualized Return If Exercised (ARIE) +56.0%
= (+$162.85/$4,418.95)*(365/24 days)

Establish DSW Inc. Covered Calls

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

Established DSW Inc.(DSW) Covered Calls for Jul2010:
06/22/2010 Bought 300 DSW @ $24.75
06/22/2010 Sold 3 DSW Jul2010 $25.00 Calls @ $1.10

DSW Inc., together with its subsidiaries, operates as a footwear specialty retailer in the United States. It offers dress, casual, and athletic footwear for women and men, as well as accessories, handbags, and hosiery. The company also sells shoes and accessories through dsw.com. As of January 30, 2010, it operated 305 DSW shoe stores; and 356 leased shoe departments for other retailers. The company was formerly known as Shonac Corporation and changed its name to DSW Inc. in February 2005. DSW Inc. was incorporated in 1969 and is based in Columbus, Ohio. As of January 31, 2009, DSW Inc. operated as a subsidiary of Retail Ventures, Inc.

The Buy Alerts spreadsheet below shows that DSW's financials are value-oriented at this time, and the total points rating of 18.22 is well above the Covered Calls Advisor's desired "Buy" threshold of 15.0.





















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


Some possible overall performance results(including commissions) for the DSW transactions would be as follows:
Stock Purchase Cost: $7,433.95
= ($24.75*300+$8.95 commission)

Net Profit:
(a) Options Income: +$318.80
= (300*$1.10 - $11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $24.75):
-$8.95 = ($24.75-$24.75)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised at $25.00): +$66.05
= ($25.00-$24.75)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $24.75): +$309.85
= (+$318.80 +$0.00 -$8.95)
Total Net Profit(If stock price exercised at $25.00): +$384.85
= (+$318.80 +$0.00 +$66.05)

Absolute Return if Unchanged at $24.75: +4.2%
= +$309.85/$7,433.95
Annualized Return If Unchanged (ARIU) +60.9%
= (+$309.85/$7,433.95)*(365/25 days)

Absolute Return if Exercised at $25.00: +5.2%
= +$384.85/$7,433.95
Annualized Return If Exercised (ARIE) +75.6%
= (+$384.85/$7,433.95)*(365/25 days)

Establish Covered Calls in Bank of America, iShares MSCI China ETF, iShares MSCI South Korea ETF, and Petrobras

With a portion of the cash received from the four positions that were in-the-money last Friday upon Jun2010 expiration, four new covered calls positions were established today as follows:

1. Bank of America Corp.(BAC) -- Covered Calls Established
A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of Bank of America Corp (BAC) covered calls as follows:

Established Bank of America Corp (BAC) Covered Calls for Jul09:
06/21/2010 Bought 400 BAC @ $16.04
06/21/2010 Sold 4 BAC Jul2010 $16.00 Calls @ $.58

A possible overall performance result(including commissions) for the BAC transactions would be as follows:
Stock Purchase Cost: $6,424.95
= ($16.04*400+$8.95 commission)

Net Profit:
(a) Options Income: +$220.05
= (400*$.58 - $11.95 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock assigned at $16.00): -$24.95
= ($16.00-$16.04)*400 - $8.95 commissions

Total Net Profit(If stock assigned at $16.00): +$195.10
= (+$220.05 +$0.00 -$24.95)

Absolute Return if Assigned at $16.00: +3.0%
= +$195.10/$6,424.95
Annualized Return If Exercised (ARIE) +42.6%
= (+$195.10/$6,424.95)*(365/26 days)

2. iShares MSCI China ETF -- Covered Calls Established
A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of iShares MSCI China ETF (FXI) covered calls as follows:
Established iShares MSCI China ETF (FXI) Covered Calls for Jul2010:
06/21/2010 Bought 1,100 FXI @ $41.85
06/21/2010 Sold 11 FXI Jul2010 $43.00 Calls @ $.71

Two possible overall performance results(including commissions) for the FXI transactions would be as follows:
Stock Purchase Cost: $46,043.95
= ($41.85*1,100+$8.95 commission)

Net Profit:
(a) Options Income: +$763.80
= (1,100*$.71 - $17.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If FXI unchanged at $41.85): $-8.95
= ($41.85-$41.85)*1,100 - $8.95 commissions
(c) Capital Appreciation (If FXI assigned at $43.00): +$1,256.05
= ($43.00-$41.85)*1,100 - $8.95 commissions

Total Net Profit(If FXI price unchanged at $41.85): +$754.85
= (+$763.80 +$0.00 -$8.95)
Total Net Profit(If FXI assigned at $43.00): +$2,019.85
= (+$763.80 +$0.00 +$1,256.05)

Absolute Return (If FXI unchanged at $41.85): +1.6%
= +$754.85/$46,043.95
Annualized Return If Unchanged (ARIU): +23.0%
= (+$754.85/$46,043.95)*(365/26 days)

Absolute Return if Exercised at $43.00: +4.4%
= +$2,019.85/$46,043.95
Annualized Return If Exercised (ARIE): +61.6%
= (+$2,019.85/$46,043.95)*(365/26 days)

3. iShares MSCI South Korea ETF -- Covered Calls Established
A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of iShares MSCI South Korea ETF (EWY) covered calls as follows:
Established iShares MSCI South Korea ETF (EWY) Covered Calls for Jul2010:
06/21/2010 Bought 400 EWY @ $49.33
06/21/2010 Sold 4 EWY Jul2010 $50.00 Calls @ $.85

Two possible overall performance results(including commissions) for the EWY transactions would be as follows:
Stock Purchase Cost: $19,740.95
= ($49.33*400+$8.95 commission)

Net Profit:
(a) Options Income: +$328.05
= (400*$.85 - $11.95 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If EWY unchanged at $49.33): $-8.95
= ($49.33-$49.33)*400 - $8.95 commissions
(c) Capital Appreciation (If EWY assigned at $50.00): +$259.05
= ($50.00-$49.33)*400 - $8.95 commissions

Total Net Profit(If EWY price unchanged at $49.33): +$319.10
= (+$328.05 +$0.00 -$8.95)
Total Net Profit(If EWY assigned at $50.00): +$587.10
= (+$328.05 +$0.00 +$259.05)

Absolute Return (If EWY unchanged at $49.33): +1.6%
= +$319.10/$19,740.95
Annualized Return If Unchanged (ARIU): +22.7%
= (+$319.10/$19,740.95)*(365/26 days)

Absolute Return if Exercised at $50.00: +3.0%
= +$587.10/$19,740.95
Annualized Return If Exercised (ARIE): +41.8%
= (+$587.10/$19,740.95)*(365/26 days)

4. Petrobras -- Covered Calls Established
A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of Petrobras (PBR) covered calls as follows:
Established Petrobras (PBR) Covered Calls for Jul09:
06/21/2010 Bought 300 PBR @ $39.34
06/21/2010 Sold 3 PBR Jul2010 $40.00 Calls @ $1.05

Two possible overall performance results(including commissions) for the PBR transactions would be as follows:
Stock Purchase Cost: $11,810.95
= ($39.34*300+$8.95 commission)

Net Profit:
(a) Options Income: +$303.80
= (300*$1.05 - $11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If PBR unchanged at $39.34): $-8.95
= ($39.34-$39.34)*300 - $8.95 commissions
(c) Capital Appreciation (If PBR assigned at $40.00): +$189.05
= ($40.00-$39.34)*300 - $8.95 commissions

Total Net Profit(If PBR price unchanged at $39.34): +$294.85
= (+$303.80 +$0.00 -$8.95)
Total Net Profit(If PBR assigned at $40.00): +$492.85
= (+$303.80 +$0.00 +$189.05)

Absolute Return (If PBR unchanged at $39.34): +2.5%
= +$294.85/$11,810.95
Annualized Return If Unchanged (ARIU): +35.0%
= (+$294.85/$11,810.95)*(365/26 days)

Absolute Return if Exercised at $40.00: +4.2%
= +$492.85/$11,810.95
Annualized Return If Exercised (ARIE): +58.6%
= (+$492.85/$11,810.95)*(365/26 days)

Intel Corp (INTC) -- Continuation

Last Friday was expiration Friday for June 2010. In a Covered Calls Advisor's blog recent post, it was noted that of the six covered calls positions held until Jun2010 expiration, four were in-the-money at expiration and were therefore exercised and the stocks were called away, and two positions ended out-of-the-money. The two out-of-money positions were SPDR S&P 500 ETF (SPY) and Intel Corp.(INTC). The prior post on this blog details this advisor's decision to sell out of the SPY position. A decision was made to retain the 300 shares of INTC and to establish a covered calls position against these 300 shares by selling 3 Jul2010 $22.00 calls. Shares of Intel have moved nicely higher since purchased last month at $20.30. In addition to continuing to meet the Buy Alerts spreadsheet purchase requirements, the target price rationale described previously continues to apply, namely: "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."

So, today the following covered calls continuation trade was executed:
06/21/2010 Sold 3 INTC Jul2010 $22.00 Call Options @$.46

1. Intel Corp (INTC) -- Continuation
The transactions history is follows:
05/21/2010 Bought 300 INTC @ $20.30
05/21/2010 Sold 3 INTC Jun2010 $22.00 Call Options @ $.52
06/21/2010 Sold 3 INTC Jul2010 $22.00 Call Options @$.46
Note: The price of INTC was $21.60 when these options were sold.

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: +$271.60
= 300*($.52+$.46) - 2*$11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $21.60):
+$381.05 = ($21.60-$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 $21.60): +$652.65
= (+$271.60 +$0.00 +$381.05)
Total Net Profit(If stock price exercised at $22.00): +$772.65
= (+$271.60 +$0.00 +$501.05)

Absolute Return (If Stock Unchanged at $21.60): +10.7%
= +$652.65/$6,098.95
Annualized Return If Unchanged (ARIU): +68.5%
= (+$652.65/$6,098.95)*(365/57 days)

Absolute Return if Exercised at $22.00: +12.7%
= +$772.65/$6,098.95
Annualized Return If Exercised (ARIE): +81.1%
= (+$772.65/$6,098.95)*(365/57 days)

SPDR S&P 500 ETF (SPY) -- Closed

Last Friday was expiration Friday for June 2010. In a Covered Calls Advisor's blog recent post, it was noted that of the six covered calls positions held until Jun2010 expiration, four were in-the-money at expiration and were therefore exercised and the stocks were called away, and two positions ended out-of-the-money. One of the out-of-the-money positions was in the SPDR S&P 500 ETF (SPY). A decision was made today to sell the 900 shares owned in SPY. Along with the bullish stock movement of the past two weeks, the implied volatility (IV) of SPY has declined, and the IV of the near-month at-the-money strike price has declined to its current level of around 20. The Covered Calls Advisor has decided to trade out of this position and with the cash proceeds will establish new positions for Jul2010 expiration in individual companies with higher option premium income opportunities (i.e. IVs > 25.0%).

Soon after the market opened today, the following transaction was made to close out the existing long position in SPY:
06/21/2010 Sold 900 SPY @ $113.20

1. SPDR S&P 500 ETF (SPY) -- Closed
The transactions history was as follows:
06/03/2010 Bought 900 SPY @ $110.519
06/03/2010 Sold 9 SPY Jun2010 $112.00 Call Options @ $1.54
06/21/2010 Sold 900 SPY @ $113.20

The performance result(including commissions) for the SPY transactions was as follows:
Stock Purchase Cost: $99,476.05
= ($110.519*900+$8.95 commission)

Net Profit:
(a) Options Income: +$1,370.30
= 900*$1.54 - $15.70 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Stock sold at $113.20): +$2,403.95
= ($113.20-$110.519)*900 - $8.95 commissions

Total Net Profit(Stock sold at $113.20): +$3,774.25
= (+$1,370.30 +$0.00 +$2,403.95)

Absolute Return (Stock sold at $113.20): +3.8%
= +$3,774.25/$99,476.05
Annualized Return: +76.9%
= (+$2,694.25/$99,476.05)*(365/18 days)

June 2010 Expiration Transactions

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

- Four positions (iShares MSCI China ETF, iShares MSCI Emerging Markets ETF, Petrobras, and Symantec Inc.) closed in-the-money. The calls were exercised and the shares of FXI, EEM, PBR, and SYMC were called away.

- Two positions in the CCAP [Intel Corp.(INTC) and the S&P 500 Spyder ETF (SPY)] ended out-of-the-money. Decisions will be made to either sell the equities, or to keep them and sell calls to establish Jul2010 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 four covered calls positions that were assigned (called away) upon Jun2010 expiration are as follows:

1. iShares MSCI China ETF (FXI) -- Closed
The transactions history was 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.
04/15/2010 Buy-to-Close (BTC) 10 FXI Apr2010 $43.00s @ $.97
04/15/2010 Sell-to-Open (STO) 10 FXI May2010 $45.00s @ $.99
Note: Price of FXI was $43.92 when the May2010 options were sold.
05/22/2010 May2010 Options Expired
Note: The closing price of FXI was $38.21 on expiration Friday
6/01/2010 Sold 10 FXI Jun2010 $39.00s @ $1.34
Note: The price of FXI was approximately $39.02 when these options were sold.
06/19/2010 1,000 shares of PWR were in-the-money and the shares were called away (assigned) at $39.00. Note: The closing price of FXI was $40.66 on expiration Friday.

The performance result(including commissions) for the FXI transactions was as follows:
Stock Purchase Cost: $44,357.90
= ($45.54*600+$42.54*400+2*$8.95 commission)

Net Profit:
(a) Options Income: +$4,022.85
= (600*($1.44+$.63+$.46+$.33-$.97+$.99+$1.34)+400*($1.13+$.63+$.46+$.33-$.97+$.99+$1.34) - 7*$10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Equity assigned at $39.00): -$5,348.95
= [($39.00-$45.54)*600-($39.00-$42.54)*400] - $8.95 commissions

Total Net Profit(Equity assigned at $39.00): -$1,326.10
= (+$4,022.85 +$0.00 -$5,348.95)

Absolute Return (FXI Called Away at $39.00): -3.0%
= -$1,326.10/$44,357.90
Annualized Return: -5.1%
= (-$1,326.10/$44,357.90)*(365/213 days)

2. iShares MSCI Emerging Markets(EEM) -- Closed
The transactions history to date for iShares MSCI Emerging Markets(EEM) is as follows:
04/30/2010 Bought 400 EEM @ $42.55
04/30/2010 Sold 4 EEM May2010 $43.00 Calls @ $.85
05/22/2010 May2010 Options Expired
Note: The closing price of EEM was $37.34 on expiration Friday
6/01/2010 Sold 4 EEM Jun2010 $38.00s @ $1.35
Note: The price of EEM was approximately $37.82 when these options were sold.
06/19/2010 400 shares of EEM were in-the-money and the shares were called away (assigned) at $38.00. Note: The closing price of EEM was $39.92 on expiration Friday.

The overall performance result (including commissions) for the EEM transactions are as follows:
Stock Purchase Cost: $17,028.95
= ($42.55*400+$8.95 commission)

Net Profit:
(a) Options Income: +$856.10
= (400*($.85+$1.35) - 2*$11.95 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Stock assigned at $38.00): -$1,828.95
= ($38.00-$42.55)*400 - $8.95 commissions

Total Net Profit(Equity assigned at $38.00): -$972.85
= (+$856.10 +$0.00 -$1,828.95)

Absolute Return (EEM called away at $38.00): -5.7%
= -$972.85/$17,028.95
Annualized Return: -41.7%
= (-$972.85/$17,028.95)*(365/50 days)

3. Petrobras (PBR) -- Closed
The transactions history to date for Petrobras(PBR) is as follows:
06/03/2010 Bought 500 PBR @ $36.259
06/03/2010 Sold 5 PBR Jun2010 $38.00 Call Options @ $.56
06/19/2010 500 shares of PBR were in-the-money and the shares were called away (assigned) at $38.00. Note: The closing price of PBR was $38.29 on expiration Friday.

The overall performance result (including commissions) for the PBR transactions are as follows:
Stock Purchase Cost: $18,138.45
= ($36.259*500+$8.95 commission)

Net Profit:
(a) Options Income: +$267.30
= 500*$.56 - $12.70 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Stock assigned at $38.00): +$861.55
= ($38.00-$36.259)*500 - $8.95 commissions

Total Net Profit(Stock assigned at $38.00): +$1,128.85
= (+$267.30 +$0.00 +$861.55)

Absolute Return (Stock called away at $38.00): +6.2%
= +$1,128.85/$18,138.45
Annualized Return: +142.0%
= (+$1,128.85/$18,138.45)*(365/16 days)

4. Symantec Inc.(SYMC) -- Closed
The transactions history to date for Symantec Inc.(SYMC) is as follows:
05/24/2010 Bought 400 SYMC @ $14.51
05/24/2010 Sold 4 SYMC Jun2010 $15.00 Call Options @ $.48
06/19/2010 400 shares of SYMC were in-the-money and the shares were called away (assigned) at $15.00. Note: The closing price of SYMC was $15.16 on expiration Friday.

The overall performance result (including commissions) for the SYMC transactions are 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 (Stock assigned at $15.00): +$187.05
= ($15.00-$14.51)*400 - $8.95 commissions

Total Net Profit(Stock Assigned at $15.00): +$367.10
= (+$180.05 +$0.00 +$187.05)

Absolute Return (Stock Assigned at $15.00): +6.3%
= +$367.10/$5,812.95
Annualized Return: +88.7%
= (+$367.10/$5,812.95)*(365/26 days)

Continuation Transaction -- Apple Inc.

Today is options expiration Friday for Jun2010. The sales momentum for the iPad is terrific and this product is only now beginning to be introduced outside the U.S. Pre-orders for the iPhone 4 have also been terrific. Apple is now hitting on all cylinders and the Covered Calls Advisor remains bullish on its ongoing stock appreciation potential. So, the decision was made to retain the existing 100 shares of Apple Inc. (AAPL) and to roll-up-and-out to the Jul2010 expiration. The transactions history as well as some possible results for this investment are detailed below:

1. Apple Inc. (AAPL) -- Continuation Transaction
Today, with Apple Inc. stock priced at $273.88, the existing Jun2010 $260.00 covered calls were deep-in-the-money and the time value remaining in the $260.00 covered calls at only $.02 [$13.90-($273.88-$260.00)], a roll-up-and-out debit spread transaction was executed as follows:
6/18/2010 Buy-to-Close (BTC) 1 AAPL Jun2010 $260.00 @ $13.90
6/18/2010 Sell-to-Open (STO) 1 AAPL Jul2010 $280.00 @ $7.50
Note: Net Debit Spread upon Roll-Up-and-Out was $6.40 ($13.90 - $7.50)

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.
04/16/2010 Buy-to-Close (BTC) 1 AAPL Apr2010 $230.00 @ $19.00
04/16/2010 Sell-to-Open (STO) 1 AAPL May2010 $250.00 @ $9.40
Note: The price of AAPL was $248.90 today when this debit-spread was transacted.
5/22/2010 May2010 Options Expired
Note: The closing price of AAPL was $242.32 on expiration Friday
6/01/2010 Sold 1 AAPL Jun2010 $260.00 @ $9.50
Note: The price of AAPL was approximately $261.35 when this option was sold.
6/18/2010 Buy-to-Close (BTC) 1 AAPL Jun2010 $260.00 @ $13.90
6/18/2010 Sell-to-Open (STO) 1 AAPL Jul2010 $280.00 @ $7.50
Note: The price of AAPL was $273.88 today when this debit-spread was transacted.

A possible overall performance result(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: -$1,421.50
= (100*($1.57-$12.20+$3.40-$19.00+$9.40+$9.50-$13.90+$7.50) - 5*$9.70 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $273.88): +$7,511.35
= ($273.88-$198.677)*100 - $8.95 commissions
(c) Capital Appreciation (If stock called away at $280.00): +$8,123.35
= ($280.00-$198.677)*100 - $8.95 commissions

Total Net Profit(If stock price unchanged at $273.88): +$6,089.85
= (-$1,421.50 +$0.00 +$7,511.35)
Total Net Profit(If stock price exercised at $280.00): +$6,701.85
= (-$1,421.50 +$0.00 +$8,123.35)

Absolute Return (If Stock unchanged at $273.88): +30.6%
= +$6,089.85/$19,876.65
Annualized Return If Exercised (ARIE) +78.2%
= (+$6,089.85/$19,876.65)*(365/143 days)

Absolute Return (If Stock exercised at $280.00): +33.7%
= +$6,701.85/$19,876.65
Annualized Return If Exercised (ARIE) +86.1%
= (+$6,701.85/$19,876.65)*(365/143 days)

Establish Gap Inc. Covered Calls

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

Established Gap Inc.(GPS) Covered Calls for Jul2010:
06/18/2010 Bought 300 GPS @ $21.55
06/18/2010 Sold 3 GPS Jul2010 $22.00 Calls @ $.60

The Gap, Inc., is a specialty retailer offering clothing, accessories, and personal care products for men, women, children, and babies primarily under the Gap, Old Navy, and Banana Republic brands. It operates over 3,000 stores located primarily in the United States, but also with international locations in Canada, the United Kingdom, France, Ireland, and Japan which account for about 10% of sales. Same-store sales have been trending downward each year since 2004. But the Gap brand and Old Navy have now had positive same-store comparables for the past four months, something which has not occurred since 2004. In addition, senior management has done a stellar job of gross margin and expense control under the excellent leadership of CEO Glenn Murphy -- 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 commitment to this investment in Gap Inc.

The Buy Alerts spreadsheet below shows that Gap's financials are value-oriented at this time, and the total points rating of 19.18 is well above the Covered Calls Advisor's desired "Buy" threshold of 15.0. If a combination of continued strong expense management (very likely) along with higher same-store comps (reasonably likely) occurs in 2010, then a bullish stock response this year is also very likely.





















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


Some possible overall performance results(including commissions) for the GPS transactions would be as follows:
Stock Purchase Cost: $6,473.95
= ($21.55*300+$8.95 commission)

Net Profit:
(a) Options Income: +$168.80
= (300*$.60 - $11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $21.55):
-$8.95 = ($21.55-$21.55)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised at $22.00): +$126.05
= ($22.00-$21.55)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $21.55): +$159.85
= (+$168.80 +$0.00 -$8.95)
Total Net Profit(If stock price exercised at $22.00): +$294.85
= (+$168.80 +$0.00 +$126.05)

Absolute Return if Unchanged at $19.76: +2.7%
= +$159.85/$6,473.95
Annualized Return If Unchanged (ARIU) +31.1%
= (+$159.85/$6,473.95)*(365/29 days)

Absolute Return if Exercised at $20.00: +4.6%
= +$294.85/$6,473.95
Annualized Return If Exercised (ARIE) +57.3%
= (+$294.85/$6,473.95)*(365/29 days)

Early Exercise -- Hewlett-Packard Company

The Covered Calls Advisor received an email notification overnight that the two call options in Hewlett-Packard Company (HPQ) were exercised yesterday -- hence, the 200 shares owned in HPQ were called away (sold) at the $46.00 strike price. This early exercise is a desirable outcome since: (1) the maximum potential return was realized on this covered calls position and it was achieved one day earlier than would have otherwise occurred; (2) this early exercise frees up cash in the Covered Calls Advisor Portfolio which opens the possibility of establishing a new covered calls position for July2010 today (Friday) and with no need to wait until next Monday (i.e. after assignment that would likely occur this weekend as a result of June2010 expiration today); and (3) it was the Covered Calls Advisor's intention to allow the shares in HPQ to be called away today anyway (upon June2010 expiration), so the early exercise is a welcomed event.

The transactions history is as follows:
03/24/2010 Bought 200 HPQ @ $52.90
03/24/2010 Sold 2 HPQ May2010 $55.00 Calls @ $.85
05/22/2010 May2010 Options Expired
Note: The closing price of HPQ was $46.58 on expiration Friday
6/01/2010 Sold 2 HPQ Jun2010 $46.00s @ $1.20
Note: The price of HPQ was approximately $45.84 when these options were sold.

The performance results (including commissions) for the covered calls position in Hewlett-Packard Company (HPQ) were as follows:
Stock Purchase Cost: $10,588.95
= ($52.90*200+$8.95 commission)

Net Profit:
(a) Options Income: +$389.10
= (200*($.85+$1.20) - 2*$10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $45.84):
-$1,420.95 = ($45.84-$52.90)*200 - $8.95 commissions
(c) Capital Appreciation (If exercised at $46.00): -$1,388.95
= ($46.00-$52.90)*200 - $8.95 commissions

Total Net Profit(If stock price unchanged at $45.84): -$1,031.85
= (+$389.10 +$0.00 -$1,420.95)
Total Net Profit(If stock price exercised at $46.00): -$999.85
= (+$389.10 +$0.00-$1,388.95)

Absolute Return if Unchanged at $45.84: -9.7%
= -$1,031.85/$10,588.95
Annualized Return If Unchanged (ARIU) -40.9%
= (-$1,031.85/$10,588.95)*(365/87 days)

Absolute Return if Exercised at $46.00: -9.4%
= -$999.85/$10,588.95
Annualized Return If Exercised (ARIE) -39.6%
= (-$999.85/$10,588.95)*(365/87 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":
















The current Market Meter Average of 3.67 is less than the 4.11 of last month. If the average had declined below 3.50, then the Overall Market Meter rating would have changed from Slightly Bullish to Neutral. But at 3.67, the rating remains at Slightly Bullish for the upcoming month.

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 June2010 options expiration, new positions for July2010 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

Establish S&P 500 Spyder (SPY) Covered Calls

Most of the remaining cash (except for 5% of the total portfolio value) in the Covered Calls Advisor Portfolio(CCAP) was used to establish an out-of-the-money position in the S&P 500 Spyder (SPY) covered calls as follows:

06/03/2010 Bought 900 SPY @ $110.519
06/03/2010 Sold 9 SPY Jun2010 $112.00 Call Options @ $1.54

Two possible overall performance results(including commissions) for the SPY transactions would be as follows:
Stock Purchase Cost: $99,476.05
= ($110.519*900+$8.95 commission)

Net Profit:
(a) Options Income: +$1,370.30
= 900*$1.54 - $15.70 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $110.519):
-$8.95 = ($110.519-$110.519)*900 - $8.95 commissions
(c) Capital Appreciation (If exercised at $112.00): +$1,323.95
= ($112.00-$110.519)*900 - $8.95 commissions

Total Net Profit(If stock price unchanged at $110.519): +$1,361.35
= (+$1,370.30 +$0.00 -$8.95)
Total Net Profit(If stock price exercised at $112.00): +$2,694.25
= (+$1,370.30 +$0.00 +$1,323.95)

Absolute Return if Unchanged at $110.519: +1.4%
= +$1,361.35/$99,476.05
Annualized Return If Unchanged (ARIU): +31.2%
= (+$1,361.35/$99,476.05)*(365/16 days)

Absolute Return if Exercised at $112.00: +2.7%
= +$2,694.25/$99,476.05
Annualized Return If Exercised (ARIE): +61.8%
= (+$2,694.25/$99,476.05)*(365/16 days)

Establishing positions for the Jun2010 Covered Calls Advisor Portfolio are now completed. The current covered calls positions are always shown in the right sidebar. These positions were established in accordance with the Slightly Bullish strategy which is to sell options that are, on average, 2% out-of-the-money and for the near-month expiration.

Establish Petrobras Covered Calls

A new covered call position was established today in the Covered Calls Advisor Portfolio(CCAP) with Petrobras(PBR) as follows:

06/03/2010 Bought 500 PBR @ $36.259
06/03/2010 Sold 5 PBR Jun2010 $38.00 Call Options @ $.56

Petroleo Brasileiro (commonly known as Petrobras) is a mixed joint stock corporation controlled by Brazil's federal government. PBR is one of the largest oil and gas companies in the world, and operates in four segments: Exploration and Production, Supply, Gas and Energy, and Distribution. The Exploration and Production segment engages in the exploration, development, and production of oil, liquefied natural gas, and natural gas in Brazil; and sells petroleum and bye products produced in natural gas processing plants. The Supply segment involves in the refining, logistic, transportation, and sale of oil products, petroleum, and alcohol. It also holds interests in petrochemical companies and fertilizer plants. The Gas and Energy segment involves in the purchase, sale, and transportation of natural gas produced in or imported into Brazil. This segment also generates and distributes electric power; and holds interests in national gas transporters and distributors, and thermoelectric power stations. The Distribution segment distributes oil products, fuel alcohol, and compressed natural gas in Brazil. The company also engages in the exploration, production, supply, and distribution of oil and gas in the Americas, Africa, Europe, and Asia. Petroleo Brasileiro was founded in 1953 and is headquartered in Rio de Janeiro, Brazil.

Two possible overall performance results(including commissions) for the PBR transactions would be as follows:
Stock Purchase Cost: $18,138.45
= ($36.259*500+$8.95 commission)

Net Profit:
(a) Options Income: +$267.30
= 500*$.56 - $12.70 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $36.259):
-$8.95 = ($36.259-$36.259)*500 - $8.95 commissions
(c) Capital Appreciation (If exercised at $38.00): +$861.55
= ($38.00-$36.259)*500 - $8.95 commissions

Total Net Profit(If stock price unchanged at $36.259): +$258.35
= (+$267.30 +$0.00 -$8.95)
Total Net Profit(If stock price exercised at $38.00): +$1,128.85
= (+$267.30 +$0.00 +$861.55)

Absolute Return if Unchanged at $36.259: +1.4%
= +$258.35/$18,138.45
Annualized Return If Unchanged (ARIU): +32.5%
= (+$258.35/$18,138.45)*(365/16 days)

Absolute Return if Exercised at $38.00: +6.2%
= +$1,128.85/$18,138.45
Annualized Return If Exercised (ARIE): +142.0%
= (+$1,128.85/$18,138.45)*(365/16 days)

ProShares Short S&P 500 ETF (SH) -- Closed

With today's Overall Market Meter reversal from Bearish back to Slightly Bullish (as described more fully in the prior blog post), the position in the inverse ProShares Short S&P 500 ETF was liquidated. The transactions history was:
06/01/2010 Bought 2,400 shares of ProShares Short S&P 500 ETF @ $52.76.
06/03/2010 Sold 2,400 shares @ $51.88
The net loss from this position was $2,120.95 = ($51.88-$52.76)*2,400-$8.95 commissions

Mea Culpa

Mea Culpa is a Latin term meaning "my fault". This term is apropos since only two days ago, the Covered Calls Advisor changed the Overall Market Meter from a rating of Slightly Bullish to a rating of Bearish. It can now be admitted that this change was a mistake in judgment; a mistake that has become exceedingly apparent to the Covered Calls Advisor during the past two days since this change was made.

In assessing what happened, it is now clear that I allowed my emotions to get the best of me. I allowed my feelings of disappointment, frustration, and anger related to the Gulf oil spill to influence my judgement as to my overall market sentiment while neglecting the Covered Calls Advisor's well-defined investing process. The Covered Calls Advisor's methods for establishing an Overall Market Outlook at any given time is a composite rating of nine factors. As shown in the chart below, the current Overall Market Meter Average rating (blue bar at the bottom of the chart) is "Slightly Bullish":

To return the Covered Calls Advisor Portfolio to its Slightly Bullish posture, today the ProShares Short S&P 500 position was sold and it was replaced with new covered calls positions in Petroleo Brazileiro (aka Petrobras) and the S&P 500 Spyder(symbol SPY). Separate blog posts detailing each of these transactions will be presented today.

In summary, the Covered Calls Advisor has always espoused developing a detailed investing process and then following that process. Unfortunately in this instance, emotions ruled and the process was not followed. This is definitely a lesson learned and I am now fully committed to being very disciplined in implementing my covered calls investing process going forward.

Regards,
Jeff

Purchase ProShares Short S&P 500 ETF

As described in an earlier post today, the Overall Market Meter now reflects the Covered Calls Advisor's change to a Bearish sentiment. The investing strategy corresponding to this outlook is to be 50% long with, on average, 1% in-the-money covered calls; and 50% short with, on average, 2% out-of-the-money covered calls for the near-month expiration. To accomplish this, three steps were implemented today as follows:
1. Sell approximately half of the total market value of the existing Covered Calls Advisor Portfolio (CCAP) to free up sufficient cash to subsequently establish a 50% short position.
2. Establish Jun2010 covered calls positions against the remaining 50% long positions in the CCAP.
3. Purchase a 50% short position with the available cash.

The first two steps above were described in detail on the prior two posts on this blog today. The third step is the subject of this blog post. To establish an underlying short position, the ProShares Short S&P 500 ETF (symbol SH) was selected. This is an inverse ETF and as such moves 1:1 in the opposite direction to that of the S&P 500 Index (symbol SPY). So if SPY were to decline by 1.0%, then SH would increase by approximately 1.0% during the same time frame.

Today, the following position was established:
06/01/2010 Bought 2,400 shares of ProShares Short S&P 500 ETF @ $52.76.
This position is now shown in the Current Covered Calls Advisor Portfolio listing in the right sidebar of this blog site. In addition, an attempt was made today to establish a covered calls position against this SH purchase by placing a day limit order to sell 24 SH Jun2010 $54.00 Calls at $1.10. However, this order did not execute and these options were priced at $1.00 bid/$1.25 ask upon the market's close.

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 to All,
Jeff

Continuation Transactions -- Apple Inc, Hewlett-Packard Co, iShares MSCI China ETF, and iShares MSCI Emerging Markets ETF Covered Calls

Friday, May 21st was options expiration for May2010. Today it was decided to retain the existing shares of Apple Inc(AAPL), Hewlett-Packard Co(HPQ), iShares MSCI China ETF(FXI), and iShares MSCI Emerging Markets ETF(EEM) and to establish Jun2010 covered calls positions. The transactions history as well as some possible results for each position are detailed below:

1. Apple Inc.(AAPL) -- Continuation Transaction
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.
04/16/2010 Buy-to-Close (BTC) 1 AAPL Apr2010 $230.00 @ $19.00
04/16/2010 Sell-to-Open (STO) 1 AAPL May2010 $250.00 @ $9.40
Note: The price of AAPL was $248.90 today when this debit-spread was transacted.
5/22/2010 May2010 Options Expired
Note: The closing price of AAPL was $242.32 on expiration Friday
6/01/2010 Sold 1 AAPL Jun2010 $260.00 @ $9.50
Note: The price of AAPL was approximately $261.35 when this option was sold.

A possible overall performance result(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: -$771.80
= (100*($1.57-$12.20+$3.40-$19.00+$9.40+$9.50) - 4*$9.70 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock called away at $260.00): +$6,123.35
= ($260.00-$198.677)*100 - $8.95 commissions

Total Net Profit(If stock price exercised at $260.00): +$5,351.55
= (-$771.80 +$0.00 +$6,123.35)

Absolute Return (If Stock exercised at $260.00): +26.9%
= +$5,351.55/$19,876.65
Annualized Return If Exercised (ARIE) +85.5%
= (+$5,351.55/$19,876.65)*(365/115 days)


2. Hewlett-Packard Co.(HPQ) -- Continuation Transaction
The transactions history to date for the Hewlett-Packard Co.(HPQ) is as follows:
03/24/2010 Bought 200 HPQ @ $52.90
03/24/2010 Sold 2 HPQ May2010 $55.00 Calls @ $.85
05/22/2010 May2010 Options Expired
Note: The closing price of HPQ was $46.58 on expiration Friday
6/01/2010 Sold 2 HPQ Jun2010 $46.00s @ $1.20
Note: The price of HPQ was approximately $45.84 when these options were sold.

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: +$389.10
= (200*($.85+$1.20) - 2*$10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $45.84):
-$1,420.95 = ($45.84-$52.90)*200 - $8.95 commissions
(c) Capital Appreciation (If exercised at $46.00): -$1,388.95
= ($46.00-$52.90)*200 - $8.95 commissions

Total Net Profit(If stock price unchanged at $45.84): -$1,031.85
= (+$389.10 +$0.00 -$1,420.95)
Total Net Profit(If stock price exercised at $46.00): -$999.85
= (+$389.10 +$0.00-$1,388.95)

Absolute Return if Unchanged at $45.84: -9.7%
= -$1,031.85/$10,588.95
Annualized Return If Unchanged (ARIU) -40.9%
= (-$1,031.85/$10,588.95)*(365/87 days)

Absolute Return if Exercised at $46.00: -9.4%
= -$999.85/$10,588.95
Annualized Return If Exercised (ARIE) -39.6%
= (-$999.85/$10,588.95)*(365/87 days)


3. iShares MSCI China ETF(FXI) -- Continuation Transaction
The transactions history to date for 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.
04/15/2010 Buy-to-Close (BTC) 10 FXI Apr2010 $43.00s @ $.97
04/15/2010 Sell-to-Open (STO) 10 FXI May2010 $45.00s @ $.99
Note: Price of FXI was $43.92 when the May2010 options were sold.
05/22/2010 May2010 Options Expired
Note: The closing price of FXI was $38.21 on expiration Friday
6/01/2010 Sold 10 FXI Jun2010 $39.00s @ $1.34
Note: The price of FXI was approximately $39.02 when these options were sold.

A possible performance result(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: +$4,022.85
= (600*($1.44+$.63+$.46+$.33-$.97+$.99+$1.34)+400*($1.13+$.63+$.46+$.33-$.97+$.99+$1.34) - 7*$10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If exercised at $39.00): -$5,348.95
= [($39.00-$45.54)*600-($39.00-$42.54)*400] - $8.95 commissions

Total Net Profit(If stock exercised at $39.00): -$1,326.10
= (+$4,022.85 +$0.00 -$5,348.95)

Absolute Return if Stock Exercised at $39.00: -3.0%
= -$1,326.10/$44,357.90
Annualized Return If Exercised (ARIE): -5.1%
= (-$1,326.10/$44,357.90)*(365/213 days)

4. iShares MSCI Emerging Markets(EEM) -- Continuation Transaction
The transactions history to date for iShares MSCI Emerging Markets(EEM) is as follows:
04/30/2010 Bought 400 EEM @ $42.55
04/30/2010 Sold 4 EEM May2010 $43.00 Calls @ $.85
05/22/2010 May2010 Options Expired
Note: The closing price of EEM was $37.34 on expiration Friday
6/01/2010 Sold 4 EEM Jun2010 $38.00s @ $1.35
Note: The price of EEM was approximately $37.82 when these options were sold.

Some possible overall performance results(including commissions) for the EEM transactions would be as follows:
Stock Purchase Cost: $17,028.95
= ($42.55*400+$8.95 commission)

Net Profit:
(a) Options Income: +$856.10
= (400*($.85+$1.35) - 2*$11.95 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $37.82):
-$1,900.95 = ($37.82-$42.55)*400 - $8.95 commissions
(c) Capital Appreciation (If exercised at $38.00): -$1,828.95
= ($38.00-$42.55)*400 - $8.95 commissions

Total Net Profit(If stock price unchanged at $37.82): -$1,044.85
= (+$856.10 +$0.00 -$1,900.95)
Total Net Profit(If stock price exercised at $38.00): -$972.85
= (+$856.10 +$0.00 -$1,828.95)

Absolute Return if Unchanged at $37.82: -6.1%
= -$1,044.85/$17,028.95
Annualized Return If Unchanged (ARIU) -44.8%
= (-$1,044.85/$17,028.95)*(365/50 days)

Absolute Return if Exercised at $38.00: -5.7%
= -$972.85/$17,028.95
Annualized Return If Exercised (ARIE) -41.7%
= (-$972.85/$17,028.95)*(365/50 days)

Position Closing Transactions

With today's overall market sentiment change to Bearish, approximately half of the existing total portfolio value was sold to free up the cash necessary to then establish a 50% short position in the Covered Calls Advisor Portfolio(CCAP). The positions liquidated included Fluor Corp, Gap Inc, InterDigital Inc, Neutral Tandem Inc, Noble Corp, Packaging Corp of America, Perfect World Co Ltd, Potash Corp, ProShares UltraShort 20+ Year Treasury Bond ETF, and Sohu.com Inc.

Detailed results for each of these positions are as follows:

1. Fluor Corporation(FLR) -- Closed
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.
04/15/2010 Buy-to-Close (BTC) 3 FLR Apr2010 $45.00s @ $6.40
04/15/2010 Sell-to-Open (STO) 3 FLR May2010 $50.00s @ $2.85
Note: Price of FLR was $51.39 when the debit-spread transaction occurred.
5/22/2010 May2010 Options Expired
Note: The closing price of FLR was $45.79 on expiration Friday
06/01/2010 Sold 300 FLR @ $46.00

The overall performance results(including commissions) for the FLR transactions are as follows:
Stock Purchase Cost: $16,487.95
($54.93*300+$8.95 commission)

Net Profit:
(a) Options Income: +$731.60
= (300*($1.95+$.95-$.05+$1.15+$1.10+$.35-$1.35+$2.15-$6.40+$2.85) - 7*$11.20 commissions)
(b) Dividend Income: +$75.00 =($.125*2)*300 shares
(c) Capital Appreciation (Stock sold at $46.00): -$2,687.95
= ($46.00-$54.93)*300 - $8.95 commissions

Total Net Profit: -$298.55
= (+$731.60 +$75.00 -$2,687.95)

Absolute Return (Stock sold at $46.00): -11.4%
= -$1,881.35/$16,487.95
Annualized Return: -16.5%
= (-$1,881.35/$16,487.95)*(365/252 days)

2. Gap Inc.(GPS) -- Closed
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)
04/15/2010 Buy-to-Close (BTC) 3 GPS Apr2010 $23.00s @ $2.30
04/15/2010 Sell-to-Open (STO) 3 GPS May2010 $25.00s @ $1.00
Note: Price of GPS was $25.26 when the debit-spread transaction occurred.
5/22/2010 May2010 Options Expired
Note: The closing price of GPS was $22.15 on expiration Friday
06/01/2010 Sold 300 GPS @ $21.58

The overall performance results(including commissions) for the GPS transactions are as follows:
Stock Purchase Cost: $5,936.95
= ($19.76*300+$8.95 commission)

Net Profit:
(a) Options Income: -$918.60
= (300*($.60-$2.80+$.55-$2.30+$1.00) - 3*$11.20 commissions)
(b) Dividend Income: +$30.00 =(300 shares*$.10)
(c) Capital Appreciation (Stock sold at $21.58): +$537.05
= ($21.58-$19.76)*300 - $8.95 commissions

Total Net Profit(Stock sold at $21.58): -$351.55
= (-$918.60 +$30.00 +$537.05)

Absolute Return (Stock sold at $21.58): -5.9%
= -$351.55/$5,936.95
Annualized Return If Exercised (ARIE) -21.8%
= (-$351.55/$5,936.95)*(365/99 days)

3. InterDigital Inc.(IDCC) -- Closed
The transactions history to date for Interdigital Inc.(IDCC) is as follows:
03/25/2010 Bought 200 IDCC @ $28.03
03/25/2010 Sold 2 IDCC Apr2010 $29.00 Calls @ $.50
04/16/2010 Buy-to-Close (BTC) 2 IDCC Apr2010 $29.00s @ $.50
04/16/2010 Sell-to-Open (STO) 2 IDCC May2010 $31.00s @ $.65
Note: The price of IDCC was $29.44 today when this credit-spread was transacted.
5/22/2010 May2010 Options Expired
Note: The closing price of IDCC was $25.59 on expiration Friday
06/01/2010 Sold 200 IDCC @ $25.84

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

Net Profit:
(a) Options Income: +$109.10
= (200*($.50-$.50+$.65 - 2*$10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Stock sold at $25.84): -$446.95
= ($25.84-$28.03)*200 - $8.95 commissions

Total Net Profit (Stock sold at $25.84): -$337.85
= (+$109.10 +$0.00 -$446.95)

Absolute Return (Stock sold at $25.84): -6.0%
= -$337.85/$5,614.95
Annualized Return: -32.3%
= (-$337.85/$5,614.95)*(365/68 days)

4. Neutral Tandem Inc.(TNDM) -- Closed
The transactions history to date for Neutral Tandem Inc.(TNDM) is as follows:
02/26/2010 Bought 200 TNDM @ $15.86
02/26/2010 Sold 2 TNDM Apr2010 $17.50 Calls @ $.40
04/17/2010 Apr2010 Options Expired
04/23/2010 Sell-to-Open (STO) 2 TNDM May2010 $17.50s @ $.55
Note: Price of TNDM was $16.95 when the May2010 options were sold.
5/22/2010 May2010 Options Expired
Note: The closing price of TNDM was $13.73 on expiration Friday
06/01/2010 Sold 200 TNDM @ $13.31

The overall performance results (including commissions) for the TNDM transactions are as follows:
Stock Purchase Cost: $3,160.95
= ($15.76*200+$8.95 commission)

Net Profit:
(a) Options Income: +$169.10
= (200*($.40+$.55) - 2*$10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Stock sold at $13.31): -$498.95
= ($13.31-$15.76)*200 - $8.95 commissions

Total Net Profit(Stock sold at $13.31): -$329.85
= (+$169.10 +$0.00 -$498.95)

Absolute Return (Stock sold at $13.31): -10.4%
= -$329.85/$3,160.95
Annualized Return If Exercised (ARIE): -40.1%
= (-$329.85/$3,160.95)*(365/95 days)

5. Noble Corp (NE) -- Closed
The transactions history to date for Noble Corp (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
03/24/2010 Bought 300 NE @ $40.08
03/24/2010 Sold 3 NE Apr2010 $41.00 Calls @ $.80
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.
04/17/2010 Apr2010 Options Expired
04/21/2010 Sell-to-Open (STO) 6 NE May2010 $43.00s @ $1.00
Note: Price of NE was $42.15 when the May2010 options were sold.
5/22/2010 May2010 Options Expired
Note: The closing price of NE was $32.42 on expiration Friday
06/01/2010 Sold 300 NE @ $27.84

The overall performance results (including commissions) for this NE covered calls position are as follows:
Stock Purchase Cost: $22,235.90
($33.98*300+$40.08*300+2*$8.95 commission)

Net Profit:
(a) Options Income: +$746.80
= (300*($1.30-$5.22+$3.87-$5.60+$1.75+$1.45+$.90-$.70+$1.30+$.60+$.45+$1.00)+300*($.80+$1.00) - 11*$11.20 commissions)
(b) Dividend Income: +$14.70 ($.049 *300 shares)
(c) Capital Appreciation (Stock sold at $27.84): -$5,519.90
= ($27.84-$33.98)*300+($27.84-$40.04)*300 - 2*$8.95 commissions

Total Net Profit(Stock sold at $27.84): -$4,758.40
= (+$746.80 +$14.70 -$5,519.90)

Absolute Return (Stock sold at $27.84): -21.4%
= -$4,758.40/$22,235.90
Annualized Return: -28.7%
= (-$4,758.40/$22,235.90)*(365/272 days)

6. Packaging Corporation of America (PKG) -- Closed
The transactions history to date for Packaging Corporation of America (PKG) is as follows:
04/19/2010 Bought 300 PKG @ $25.06
04/19/2010 Sold 3 PKG May2010 $25.00 Calls @ $1.05
5/22/2010 May2010 Options Expired
Note: The closing price of PKG was $21.41 on expiration Friday
06/01/2010 Sold 300 PKG @ $21.81

The overall performance results(including commissions) for the PKG transactions are as follows:
Stock Purchase Cost: $7,526.95
= ($25.06*300+$8.95 commission)

Net Profit:
(a) Options Income: +$303.80
= (300*$1.05 - $11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Stock sold at $21.81): -$983.95
= ($21.81-$25.06)*300 - $8.95 commissions

Total Net Profit(Stock sold at $21.81): -$680.15
= (+$303.80 +$0.00 -$983.95)

Absolute Return (Stock sold at $21.81): -9.0%
= -$680.15/$7,526.95
Annualized Return: -76.7%
= (-$680.15/$7,526.95)*(365/43 days)

7. Perfect World Co. Ltd.(PWRD) -- Closed
The transactions history to date for Perfect World Co. Ltd.(PWRD) is as follows:
04/28/2010 Bought 400 PWRD @ $34.75
04/28/2010 Sold 4 PWRD May2010 $35.00 Call Options @ $1.55
5/22/2010 May2010 Options Expired
Note: The closing price of PWRD was $25.72 on expiration Friday
06/01/2010 Sold 400 PWRD @ $26.27

The overall performance results(including commissions) for the PWRD transactions are as follows:
Stock Purchase Cost: $13,908.95
= ($34.75*400+$8.95 commission)

Net Profit:
(a) Options Income: +$608.05
= (400*$1.55 - $11.95 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Stock sold at $26.27): -$3,400.95
= ($26.27-$34.75)*400 - $8.95 commissions

Total Net Profit(Stock sold at $26.27): -$2,792.90
= (+$608.05 +$0.00 -$3,400.95)

Absolute Return if Exercised at $35.00: -20.1%
= -$2,792.90/$13,908.95
Annualized Return: -215.6%
= (-$2,792.90/$13,908.95)*(365/34 days)

8. Potash Corp of Saskatchewan Inc.(POT) -- Closed
The transactions history to date for Potash Corp of Saskatchewan Inc.(POT) is as follows:
04/16/2010 Bought 100 POT @ $109.86
04/16/2010 Sold 1 POT May2010 $115.00 Call Option @ $3.03
5/22/2010 May2010 Options Expired
Note: The closing price of POT was $97.61 on expiration Friday
06/01/2010 Sold 100 POT @ $98.61

The overall performance results(including commissions) for the POT transactions are as follows:
Stock Purchase Cost: $10,977.05
= ($109.86*100+$8.95 commission)

Net Profit:
(a) Options Income: +$293.30
= (100*$3.03 - $9.70 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Stock sold at $98.61): -$1,133.95
= ($98.61-$109.86)*100 - $8.95 commissions

Total Net Profit(Stock sold at $98.61): -$840.65
= (+$293.30 +$0.00 -$1,133.95)

Absolute Return (Stock sold at $98.61): -7.7%
= -$840.65/$10,977.05
Annualized Return: -60.8%
= (-$840.65/$10,977.05)*(365/46 days)

9. ProShares UltraShort 20+ Year Treasury Bond ETF (TBT) -- Closed
The transactions history to date for ProShares UltraShort 20+ Year Treasury Bond ETF (TBT) is as follows:
03/22/2010 Bought 300 TBT @ $46.81
03/22/2010 Sold 3 TBT Apr2010 $48.00 Calls @ $.45
04/17/2010 3 Apr2010 TBT Options Expired
Note: Price of TBT was $47.70 upon Apr2010 expiration.
04/22/2010 Buy 300 TBT @ $46.63
04/22/2010 Sell-to-Open (STO) 6 TBT May2010 $49.00s @ $.43
5/22/2010 May2010 Options Expired
Note: The closing price of TBT was $38.75 on expiration Friday
06/01/2010 Sold 300 TBT @ $39.32

The overall performance results (including commissions) for the TBT transactions are as follows:
Stock Purchase Cost: $28,049.90
= ($46.81*300+$46.63*300+2*$8.95 commission)

Net Profit:
(a) Options Income: +$368.35
= (300*$.45 + $600*$.43 -$11.20 commissions -$13.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (TBT sold at $39.32): -$4,457.90
= ($39.32-$46.81)*300 + ($39.32-$46.63)*300 - 2*$8.95 commissions

Total Net Profit(TBT sold at $39.32): -$4,089.55
= (+$368.35 +$0.00 -$4,457.90)

Absolute Return (TBT sold at $39.32): -14.6%
= -$4,089.55/$28,049.90
Annualized Return: -75.0%
= (-$4,089.55/$28,049.90)*(365/71 days)

10. Sohu.com Inc.(SOHU) -- Closed
The transactions history to date for Sohu.com Inc.(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.
04/17/2010 Apr2010 Options Expired
04/23/2010 Sell-to-Open (STO) 2 SOHU May2010 $55.00s @ $1.45
Note: Price of SOHU was $52.10 when the May2010 options were sold.
5/22/2010 May2010 Options Expired
Note: The closing price of SOHU was $43.20 on expiration Friday
06/01/2010 Sold 200 SOHU @ $44.16

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

Net Profit:
(a) Options Income: +$2,077.30
= (200*($3.50+$.75+$.85+$3.10+$1.05+$1.45) - 6*$10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Stock sold at $44.16): -$3,986.95
= ($44.16-$64.05)*200 - $8.95 commissions

Total Net Profit(Stock sold at $44.16): -$1,909.65
= (+$2,077.30 +$0.00 -$3,986.95)

Absolute Return (Stock sold at $44.16): -14.9%
= -$1,909.65/$12,818.95
Annualized Return: -23.8%
= (-$1,909.65/$12,818.95)*(365/228 days)

Overall Market Viewpoint Turns Bearish

Today, the Covered Calls Advisor is issuing a major change from a Slightly Bullish investing posture to a Bearish posture. This major change comes as a direct result of the negative psychology that this advisor believes will continue to pervade the stock markets until the Gulf oil leak is contained. With BP's announcement this weekend that the so-called Top Kill approach failed and also the likelihood that oil will continue to drain into the Gulf throughout the summer, the current slow economic recovery is likely to be overshadowed by the negativity that will continue to plague investor psychology as long as this spill continues. This advisor forecasts that this event will be identified as the "BP Black Swan".

The Covered Calls Advisor's investing strategy corresponding to a Bearish market is to be:
50% long with, on average, 1% in-the-money covered calls positions; and
50% short with, on average, 2% out-of-the-money covered calls positions. These positions will continue to be established on near-month options expirations (currently June 2010).
This viewpoint is now shown on the Overall Market Meter in the right sidebar. For reference, a more detailed explanation of the Covered Calls Advisor's investing strategy under each of the various market sentiment indicators is provided here: link. Covered calls positions will be established in accordance with this investing strategy and will be posted on this blog on the same day they occur.

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