Returns -- Through November 2011

1. November 2011 Year-to-Date Results:

As shown in the "Year-to-Date 2011" line in the chart below, the Covered Calls Advisor Portfolio (CCAP) has slightly underperformed the benchmark Russell 3000 index by .39 percentage points (-1.77% minus -1.38%) over the first eleven months of calendar year 2011.


















CCAP Absolute Return (Jan 1st through November 30th, 2011) = -1.77%
($282,375.52-$287,453.75)/$287,453.75

Benchmark Russell 3000(IWV) Absolute Return(Jan 1st to November 30th, 2011) = -1.38% ($73.92-$74.95)/$74.95


2. Prior Years Results:

The Covered Calls Advisor Portfolio (CCAP) began in September, 2007. The annualized returns achieved each year for 2007 through 2010 compared with the Russell 3000 benchmark 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 equities in the CCAP are also held in this advisor's 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 is "NEUTRAL". The corresponding investing strategy is to, on-average, sell 1% out-of-the-money covered calls for the nearest expiration month.

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

Continuation Transactions -- Nine Covered Calls Positions

Upon Nov2011 options expiration, eleven of the thirteen total covered calls positions in the Covered Calls Advisor Portfolio (CCAP) expired. Today, a decision was made to re-establish covered calls positions for nine of these eleven equities (Citigroup Inc., Halliburton Co., iShares MSCI China ETF, iShares MSCI Emerging Markets ETF, iShares MSCI South Korea ETF, Morgan Stanley, Mylan Inc., Peabody Energy, and Valero Energy). The detailed transactions history for these positions as well as possible results for these investments are as follows:

1. Citigroup Inc.(C) -- Continuation
The transaction history is as follows:
10/26/2011 Sold 3 Citigroup, Inc.(C) Nov2011 $31.00 Put Options @ $1.96
Note: the price of Citi stock was $30.42 today when these puts were sold.
11/19/2011 Nov2011 Options Expired.
Note: the price of Citi stock was $26.28 upon options expiration.
11/30/2011 Sold 3 Dec2011 $27.00 call options @ $1.09
Note: the price of Citigroup stock was $26.61 when these options were sold.

Two possible overall performance results(including commissions) for this Citigroup, Inc.(C) position would be as follows:
100% Cash-Secured Cost Basis: $9,300.00
= $31.00*300

Net Profit:
(a) Options Income: +$892.60
= ($1.96 + $1.09) *300 shares - 2*$11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $26.61): -$1,325.95
= ($26.61-$31.00)*300 - $8.95 commissions
(c) Capital Appreciation (If Citigroup stock above $27.00 at Dec2011 expiration):
-$1,191.05
= ($27.00-$31.00) -$8.95 commissions

Total Net Profit(If stock price unchanged at $26.61): -$433.35
= (+$892.60 +$0.00 -$1,325.95)
Total Net Profit(If stock price above $27.00 at Dec2011 options expiration): -$298.45
= (+$892.60 +$0.00 -$1,191.05)

1. Absolute Return if Unchanged at $26.61: -4.7%
= -$433.35/$9,300.00
Annualized Return If Unchanged (ARIU): -32.7%
= (-$433.35/$9,300.00)*(365/52 days)

2. Absolute Return (If stock price above $27.00 at Dec2011 options expiration: -3.2%
= -$298.45/$9,300.00
Annualized Return (If stock price above $27.00 at expiration): -22.5%
= (-$298.45/$9,300.00)*(365/52 days)


2. Halliburton Co. -- Continuation
The transaction history is as follows:
10/26/2011 Sold 3 Halliburton Co.(HAL) Nov2011 $36.00 Put Options @ $2.06
Note: the price of HAL stock was $35.56 today when these puts were sold.
11/19/2011 Nov2011 Options Expired.
Note: the price of Halliburton stock was $35.96 upon options expiration.
11/30/2011 Ex-Dividend payment of $27.00 = $.09 * 300 shares
11/30/2011 Sold 3 Dec2011 $37.00 call options @ $1.05
Note: the price of Halliburton Co. stock was $35.99 when these options were sold.

Two possible overall performance results(including commissions) for this Halliburton Co.(HAL) position would be as follows:
100% Cash-Secured Cost Basis: $10,800.00
= $36.00*300

Net Profit:
(a) Options Income: +$910.60
= ($2.06 + $1.05)*300 shares - 2*$11.20 commissions
(b) Dividend Income: +$27.00 ($.09*300 shares)
(c) Capital Appreciation (If stock price unchanged at $35.99): -$11.95
= ($35.99 - $36.00)*300 - $8.95 commissions
(c) Capital Appreciation (If HAL stock above $37.00 at Dec2011 expiration): +$291.05= ($37.00-$36.00)*300 -$8.95 commissions

Total Net Profit(If stock price unchanged at $35.99): +$925.65
= (+$910.60 +$27.00 -$11.95)
Total Net Profit(If stock above $37.00 at Dec2011 options expiration):+$1,228.65
= (+$910.60 +$27.00 +$291.05)

1. Absolute Return if Unchanged at $35.99: +8.6%
= +$925.65/$10,800.00
Annualized Return If Unchanged (ARIU): +60.2%
= (+$925.65/$10,800.00)*(365/52 days)

2. Absolute Return (If stock above $37.00 at Dec2011 options expiration): +11.4%
= +$1,228.65/$10,800.00
Annualized Return (If stock price above $36.00 at expiration): +79.9%
= (+$1,228.65/$10,800.00)*(365/52 days)


3. iShares MSCI China ETF (FXI) -- Continuation
The transaction history is as follows:
04/18/2011 Bought 1,000 FXI @ $44.80
04/20/2011 Sold 10 FXI May2011 $47.00 Calls @ $.49
Note: the price of FXI was $45.88 when the calls were sold.
05/31/2011 Sold 10 FXI Jul2011 $47.00 Calls @ $.37
Note: The price of FXI was $45.18 when these call options were sold.
06/21/2011 FXI ETF distribution of $.68555 per share
07/16/2011 Jul2011 FXI options expired.
07/18/2011 Sold 10 FXI Aug2011 $42.00 Calls @$.71
08/20/2011 Aug2011 FXI options expired.
08/22/2011 Sold 10 FXI Sep2011 $42.00 Calls @ $.65
09/17/2011 Sep2011 FXI options expired.
09/20/2011 Sold 10 FXI Oct2011 $38.00 Calls @ $.47
10/22/2011 Oct2011 options expired.
10/26/2011 Sold 10 FXI Nov2011 $37.00 Calls @ $.86
11/19/2011 Nov2011 FXI options expired.
11/30/2011 Sold 10 FXI Jan2012 $38.00 Calls @ $1.10
Note: the price of FXI was $36.42 today when these call options were sold.
12/20/2011 Ex-Distribution $79.40 = $.0794 * 1,000 shares

Two possible overall performance results(including commissions) for these iShares MSCI China ETF (FXI) transactions would be as follows:
Stock Purchase Cost: $44,808.95
= ($44.80*1,000+$16.45 commission)

Net Profit:
(a) Options Income: +$4,561.10
= (1,000*($.49+$.37+$.71+$.65+$.47+$.86+$1.10) - 7*$12.70 commissions)
(b) Distribution Income: $767.95 = ($.68555+$.0794) * 1,000 shares
(c) Capital Appreciation (If FXI price unchanged at $36.42 at expiration): -$8,388.95
= ($36.42-$44.80)*1,000 - $8.95 commissions
(c) Capital Appreciation (If FXI assigned at $38.00 at expiration): -$6,808.95
= ($38.00-$44.80)*1,000 - $8.95 commissions

Total Net Profit (If FXI price unchanged at $36.42 at expiration): -$3,062.90
= (+$4,561.10 +$767.95 -$8,388.95)
Total Net Profit (If FXI assigned at $38.00): -$1,482.90
= (+$4,561.10 +$767.95 -$6,808.95)

1. Absolute Return (If FXI unchanged at $36.42 at expiration): -6.8%
= -$3,062.90/$44,808.95
Annualized Return (If FXI unchanged at expiration): -8.9%
= (-$3,062.90/$44,808.95)*(365/278 days)

2. Absolute Return (If FXI assigned at $38.00 at expiration): -3.3%
= -$1,482.90/$44,808.95
Annualized Return If Assigned (ARIA): -4.3%
= (-$1,482.90/$44,808.95)*(365/278 days)


4. iShares MSCI Emerging Markets ETF (EEM) -- Continuation
The transactions history is as follows:
04/18/2011 Bought 500 EEM @ $47.81
04/19/2011 Sold 5 EEM May2011 $49.00 Calls @ $.83
Note: the price of EEM was $48.32 when the calls were sold.
05/27/2011 Sold 5 EEM Jun2011 $49.00 Calls @ $.44
Note: the price of EEM was $47.83 when the calls were sold.
06/18/2011 Jun2011 Options Expired
Note: the price of EEM was $45.34 upon options expiration.
6/22/2011 Distribution Income $.46092 per share.
06/28/2011 Sold 5 EEM Jul2011 $47.00 Calls @ $.62
Note: price of EEM was $46.42 when these options were sold.
07/16/2011 Jul2011 EEM options expired.
07/18/2011 Sold 5 EEM Aug2011 $47.00 Calls @$.99
Note: The price of EEM was $46.55 when these call options were sold.
08/20/2011 Aug2011 EEM options expired.
08/22/2011 Sold 5 EEM Sep2011 $42.00 Calls @ $.71
09/17/2011 Sep2011 EEM options expired.
09/20/2011 Sold 5 EEM Oct2011 $42.00 Calls @ $.63
Note: The price of EEM was $39.68 when these call options were sold.
10/22/2011 Oct2011 options expired.
10/26/2011 Sold 5 EEM Nov2011 $41.00 Calls @ $.78
11/19/2011 Nov2011 EEM options expired.
11/30/2011 Sold 5 EEM Dec2011 $41.00 Calls @ $.59
Note: the price of EEM was $39.71 today when these call options were sold.

Two possible overall performance results(including commissions) for these iShares MSCI Emerging Markets ETF (EEM) transactions would be as follows:
Stock Purchase Cost: $23,913.95
= ($47.81*500+$8.95 commission)

Net Profit:
(a) Options Income: +$2,648.40
= [500*($.83 +$.35+$.62+$.99+$.71+$.63+$.78+$.59) - 8*$12.70 commissions]
(b) Distribution Income: $230.46 = $.46092 * 500 shares
(c) Capital Appreciation (If EEM unchanged at $39.71 at expiration): -$4,058.95
= ($39.71-$47.81)*500 - $8.95 commissions
(c) Capital Appreciation (If stock assigned at $41.00): -$3,413.95
= ($41.00-$47.81)*500 - $8.95 commissions

Total Net Profit (If EEM price unchanged at $39.71 at expiration): -$1,180.09
= (+$2,648.40 +$230.46 -$4,058.95)
Total Net Profit (If EEM assigned at $41.00): -$535.09
= (+$2,648.40 +$230.46 -$3,413.95)

1. Absolute Return (If EEM price unchanged at $39.68 at expiration): -4.9%
= -$1,180.09/$23,913.95
Annualized Return if Unchanged at expiration (ARIU): -7.4%
= (-$1,180.09/$23,913.95)*(365/243 days)

2. Absolute Return (If EEM assigned at $41.00 at expiration): -2.2%
= -$535.09/$23,913.95
Annualized Return If Assigned (ARIA): -3.4%
= (-$535.09/$23,913.95)*(365/243 days)


5. iShares MSCI South Korea ETF (EWY) -- Continuation
The transactions history is as follows:
10/25/2011 Bought 800 EWY @ $54.62
10/25/2011 Sold 8 EWY Nov2011 $54.00 Calls @ $2.59
Note: these call options were sold with the price of EWY at $54.62
11/19/2011 Nov2011 EWY options expired.
11/30/2011 Sold 8 EWY Dec2011 $56.00 Calls @ $1.48
Note: the price of EWY was $55.38 today when these call options were sold.

Two possible overall performance results(including commissions) for the EWY position would be as follows:
Stock Purchase Cost: $43,704.95
= ($54.62*800+$8.95 commission)

Net Profit:
(a) Options Income: +$3,226.10
= (800*($2.59+$1.48) - 2*$14.95 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If EWY price unchanged at $55.38): +$599.05
= ($55.38-$54.62)*800 - $8.95 commissions
(c) Capital Appreciation (If EWY assigned at $56.00): +$1,095.05
= ($56.00-$54.62)*800 - $8.95 commissions

Total Net Profit (If EWY price unchanged at $55.38): +$3,825.15
= (+$3,226.10 +$0.00 +$599.05)
Total Net Profit(If EWY assigned at $56.00): +$4,321.15
= (+$3,226.10 +$0.00 +$1,095.05)

1. Absolute Return if Unchanged at $55.38: +8.8%
= +$3,825.15/$43,704.95
Annualized Return If Unchanged (ARIU): +60.3%
= (+$3,825.15/$43,704.95)*(365/53 days)

2. Absolute Return if Assigned at $56.00: +9.9%
= +$4,321.15/$43,704.95
Annualized Return If Assigned (ARIA): +68.1%
= (+$4,321.15/$43,704.95)*(365/53 days)


6. Morgan Stanley -- Continuation
The transactions history is as follows:
10/26/2011 Sold 6 Morgan Stanley (MS) Nov2011 $17.00 Put Options @ $1.16
Note: the price of MS stock was $16.82 today when these puts were sold.
11/19/2011 Nov2011 MS put options exercised -- 600 shares MS purchased @ $17.00.
11/30/2011 Sold 6 MS Dec2011 $15.00 Calls @ $.44
Note: the price of MS was $14.18 today when these call options were sold.

Two possible overall performance results(including commissions) for this Morgan Stanley (MS) transaction would be as follows:
100% Cash-Secured Cost Basis: $10,200.00
= $17.00*600

Net Profit:
(a) Options Income: +$933.10
= ($1.16+$.44)*600 shares - 2*$13.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $14.18): -$1,700.95
= ($14.18-$17.00)*600 - $8.95 commissions
(c) Capital Appreciation (If MS stock assigned at $15.00 at Dec2011 expiration):
-$1,208.95 = ($15.00-$17.00)*600 - $8.95 commissions

Total Net Profit(If stock price unchanged at $14.18): -$767.85
= (+$933.10 +$0.00 -$1,700.95)
Total Net Profit(If stock price above $15.00 at Nov2011 options expiration): -$275.85
= (+$933.10 +$0.00 -$1,208.95)

1. Absolute Return if Unchanged at $14.18: -7.5%
= -$767.85/$10,200.00
Annualized Return If Unchanged (ARIU): -52.8%
= (-$767.85/$10,200.00)*(365/52 days)

2. Absolute Return (If stock price above $15.00 at Dec2011 options expiration): -2.7%
= -275.85/$10,200.00
Annualized Return (If stock price above $15.00 at expiration): -19.0%
= (-275.85/$10,200.00)*(365/52 days)


7. Mylan Inc. -- Continuation
The transaction history is as follows:
07/18/2011 Sold 5 Mylan Inc. (MYL) Aug2011 $23.00 Put Options @ $1.06
Note: the price of MYL stock was $22.98 today when these puts were sold.
08/20/2011 Aug2011 MYL options exercised and stock purchased at $23.00 per share.
08/22/2011 Sold 5 MYL Sep2011 $22.00 Calls @ $.46
09/17/2011 Sep2011 MYL options expired.
09/20/2011 Sold 5 MYL Oct2011 $22.00 Calls @ $.63
Note: The price of MYL was $20.48 when these call options were sold.
10/22/2011 Oct2011 options expired.
Note: the MYL price was $18.04 at option expiration.
10/24/2011 Sold 5 MYL Nov2011 $19.00 Call Options @ $.56
Note: the price of MYL was $18.08 when the options were sold.
11/19/2011 Nov2011 MYL options expired.
11/30/2011 Sold 5 MYL Jan2011 $20.00 Calls @ $1.11
Note: the price of MYL was $19.38 today when these call options were sold.

Two possible overall performance results(including commissions) for the Mylan Inc. transactions would be as follows:
Stock Purchase Cost: $11,508.95
= ($23.00*500+$8.95 commission)

Net Profit:
(a) Options Income: +$1,846.50
= 500*($1.06+$.46+$.63+$.56+$1.11) - 5*$12.70 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If MYL unchanged at $19.38):
-$1,818.95 = ($19.38-$23.00)*500 - $8.95 commissions
(c) Capital Appreciation (If MYL exercised at $20.00): -$1,508.95
= ($20.00-$23.00)*500 - $8.95 commissions

Total Net Profit(If MYL unchanged at $19.38): +$27.55
= (+$1,846.50 +$0.00 -$1,818.95)
Total Net Profit(If MYL exercised at $20.00): +$337.55
= (+$1,846.50 +$0.00 -$1,508.95)

1. Absolute Return if Unchanged at $19.38: +0.2%
= +27.55/$11,508.95
Annualized Return If Unchanged (ARIU): +0.5%
= (+27.55/$11,508.95)*(365/187 days)

2. Absolute Return if Assigned at $20.00: +2.9%
= +$337.55/$11,508.95
Annualized Return If Assigned (ARIA): +5.7%
= (+$337.55/$11,508.95)*(365/187 days)


8. Peabody Energy Corp. -- Continuation
The transaction history is as follows:
09/19/2011 Bought 300 shares BTU at $44.208
09/19/2011 Sold 3 BTU Oct2011 $47 Calls @ $1.67
10/22/2011 Oct2011 options expired.
Note: the BTU price was $38.89 at option expiration.
10/24/2011 Sold 3 BTU Nov2011 $41.00 Call Options @ $1.85
Note: the price of BTU was $40.40 when the options were sold.
11/19/2011 Nov2011 BTU options expired.
11/30/2011 Sold 3 BTU Dec2011 $39.00 Calls @ $1.10
Note: the price of BTU was $37.90 today when these call options were sold.

Two possible overall performance results(including commissions) for this Peabody Energy Corp.(BTU) position would be as follows:
Stock Purchase Cost: $13,271.35
= ($44.208*300+$8.95 commission)

Net Profit:
(a) Options Income: +$1,352.40
= (300*($1.67+$1.85+$1.10) - 3*$11.20 commissions)
(b) Dividend Income: $0.00
(c) Capital Appreciation (If stock unchanged at $37.90 at expiration): -$1,901.35
= ($37.90-$44.208)*300 - $8.95 commissions
(c) Capital Appreciation (If stock assigned at $39.00): -$1,571.35
= ($39.00-$44.208)*300 - $8.95 commissions

Total Net Profit (If stock price unchanged at $37.90 at expiration): -$548.95
= (+$1,352.40 +$0.00 -$1,901.35)
Total Net Profit (If stock assigned at $39.00): -$218.95
= (+$1,352.40 +$0.00 -$1,571.35)

1. Absolute Return (If stock unchanged at $37.90 at expiration): -4.1%
= -$548.95/$13,271.35
Annualized Return (If stock unchanged at expiration): -17.0%
= (-$548.95/$13,271.35)*(365/89 days)

2. Absolute Return (If stock assigned at $39.00 at expiration): +0.5%
= +$62.25/$13,271.35
Annualized Return (If stock assigned at $39.00): +1.9%
= (+$62.25/$13,271.35)*(365/89 days)


9. Valero Energy Corp. -- Continuation
The transaction history is as follows:
10/25/2011 Sold 4 Valero Energy Corp.(VLO) Nov2011 $22.00 Put Options @ $1.75
Note: the price of VLO stock was $21.26 today when these puts were sold.
11/19/2011 Nov2011 VLO put options exercised -- 400 shares VLO purchased @ $22.00.
11/30/2011 Sold 4 VLO Dec2011 $23.00 Calls @ $.61
Note: the price of VLO was $22.27 today when these call options were sold.

Two possible overall performance results(including commissions) for this Valero Energy Corp.(VLO) transaction would be as follows:
100% Cash-Secured Cost Basis: $8,800.00
= $22.00*400

Net Profit:
(a) Options Income: +$920.10
= ($1.75+$.61)*400 shares - $11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $22.27 at expiration): +$99.05
= ($22.27-$22.00)*400 - $8.95 commissions
(c) Capital Appreciation (If VLO stock above $23.00 at Dec2011 expiration): +$391.05
= ($23.00-$22.00)*400 -$8.95 commissions

Total Net Profit(If stock price unchanged at $21.26): +$1,019.15
= (+$920.10 +$0.00 +$99.05)
Total Net Profit(If stock price above $23.00 at Dec2011 options expiration):
+$1,311.15 = (+$920.10 +$0.00 +$391.05)

1. Absolute Return if Unchanged at $22.27: +11.6%
= +$1,019.15/$8,800.00
Annualized Return If Unchanged (ARIU): +79.8%
= (+$1,019.15/$8,800.00)*(365/53 days)

2. Absolute Return (If stock price above $23.00 at Dec2011 options expiration):
+14.9% = +$1,311.15/$8,800.00
Annualized Return (If stock price above $23.00 at expiration): +102.6%
= (+$1,311.15/$8,800.00)*(365/53 days)

November 2011 Expiration Results

The Covered Calls Advisor Portfolio (CCAP) contained a total of thirteen covered calls positions with November 2011 expirations, with the following results:

- Eleven positions in the CCAP (Apple Inc., Citigroup, Halliburton, iShares MSCI Emerging Markets ETF, iShares MSCI China ETF, iShares MSCI South Korea ETF, iShares MSCI Taiwan ETF, Morgan Stanley, Mylan Inc., Peabody Energy Corp., and Valero Energy) expired out-of-the-money. Decisions will be made to either sell these equities, or to keep them and sell calls to establish December 2011 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.

- Two positions (Bunge Ltd. and International Paper Co.) were in-the-money and the stocks were assigned (i.e. stock called away) upon option expiration last Friday. The detailed history and return-on-investment results for these closed positions is as follows:

1. Bunge Ltd.(BG) -- Closed
The transaction history is as follows:
10/26/2011 Sold 3 Bunge Ltd.(BG) Nov2011 $60.00 Put Options @ $3.10
Note: the price of BG stock was $58.62 today when these puts were sold.
11/19/2011 3 BG Nov2011 $60.00 Put options expired.
Note: the price of BG was $60.83 upon close on November options expiration Friday.

The performance result(including commissions) for this Bunge Ltd.(BG)transaction was as follows:
100% Cash-Secured Cost Basis: $18,000.00
= $60.00*300

Net Profit:
(a) Options Income: +$918.80
= ($3.10*300 shares) - $11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If BG stock above $60.00 at Nov2011 expiration): +$0.00
= ($60.00-$60.00) -$0.00 commissions

Total Net Profit(Stock price above $60.00 at Nov2011 options expiration): +$918.80
= (+$918.80 +$0.00 +$0.00)

Absolute Return (Stock price above $60.00 at Nov2011 options expiration and put options thus expire worthless): +5.1%
= +$918.80/$18,000.00
Annualized Return: +77.6%
= (+$918.80/$18,000.00)*(365/24 days)


2. International Paper Co.(IP) -- Continuation Transaction
The transactions history is as follows:
09/19/2011 Bought 400 shares IP at $26.978
09/19/2011 Sold 4 IP Oct2011 $28 Calls @ $1.18
10/22/2011 Oct2011 options expired.
Note: the IP price was $25.93 at options expiration.
10/24/2011 Sold 4 IP Nov2011 $27.00 Call Options @ $.73
Note: the price of IP was $26.25 when the options were sold.
11/11/2011 Buy-to-Close 4 Nov2011 $27.00 Calls at $1.86
11/11/2011 Sell-to-Open 5 Dec2011 $28.00 Calls at $1.80
Note: the price of IP was $28.84 when this credit spread was transacted.
11/14/2011 Ex-Div $105.00 = $.2625 * 400 shares
11/19/2011 Nov2011 options expired.
Note: the price of IP was $28.02 at options expiration.

The overrall performance result(including commissions) for these International Paper Co.(IP) transactions was as follows:
Stock Purchase Cost: $10,800.15
= ($26.978*400+$8.95 commission)

Net Profit:
(a) Options Income: +$704.15
= (400*($1.18+$.73-$1.86+$1.80) - 3*$11.95 commissions)
(b) Dividend Income: +$105.00 = $.2625 * 400 shares
(c) Capital Appreciation (Stock assigned at $28.00): +$399.85
= ($28.00-$26.978)*400 - $8.95 commissions

Total Net Profit (Stock assigned at $28.00): +$1,209.00
= (+$704.15 +$105.00 +$399.85)

Absolute Return (Stock assigned at $28.00 at expiration): +11.2%
= +$1,209.00/$10,800.15
Annualized Return: +45.9%
= (+$1,209.00/$10,800.15)*(365/89 days)

This International Paper position demonstrates the triple-income potential of covered calls investing; by obtaining profit from all three potential profit sources available to covered calls investors, namely: (1) options income from selling calls; (2) dividend income; and (3) capital appreciation from an increase in the price of the underlying stock. Moreover, in this particular case, a total 11.2% absolute return was achieved from this 3-month investment (a 45.9% annualized return-on-investment) -- a very attractive result for an investment in a company in the low-growth Paper and Packaging industry.

Overall Market Meter Rating Remains at "Neutral"

Each month during options expiration week, the Covered Calls Advisor re-calculates the current values for each of the eight factors used to determine the "Overall Market Meter" rating. This month, the Overall Market Meter rating remains unchanged at Neutral.

The eight factors used can be categorized as:
- macroeconomic (the first two indicators in the chart below),
- momentum (next two indicators in the chart),
- value (next three indicators), and
- growth (the last indicator).















The current Market Meter Average of 3.38 (see blue line in chart above) is identical with last month's overall rating. Moreover, all eight factors used to determine the Overall Market Meter rating remained unchanged from November's analysis.

As shown in the right sidebar, the covered calls investing strategy corresponding to this overall Neutral sentiment is to "on-average sell 1% out-of-the-money covered calls for the nearest expiration month." So, now with the December 2011 options expiration having occurred, newly established positions for January 2012 expiration will be established in accordance with this guideline.

Your comments or questions regarding this post (or the details related to any of the eight factors used in this model) are welcomed. Please click on the "comments" link below or email me at the address shown in the upper-right sidebar.

Jeff

Roll Up and Out -- International Paper Co.

International Paper goes ex-dividend next Monday with a $.2625 dividend. Today, with the price of IP at $28.84 at about 3:30 this afternoon, the four Nov2011 $27.00 covered calls were well in-the-money. At that time, there was only $.02 of extrinsic value (i.e. time value) remaining in the Nov2011 $27 options with eight days remaining until options expiration. The Covered Calls Advisor thought there was a strong likelihood that the Nov2011 $27s would be exercised and the stock would be called away. A decision was made to retain the IP stock and to roll-up-and-out to the Dec2011 $28.00 strike price. The related transactions were:

11/11/2011 Buy-to-Close 4 Nov2011 $27.00 Calls at $1.86
11/11/2011 Sell-to-Open 4 Dec2011 $28.00 Calls at $1.80
Note: the price of IP was $28.84 when this credit spread was transacted.

The overall transactions history and a possible return-on-investment result are detailed below:

1. International Paper Co.(IP) -- Continuation Transaction
The transactions history is as follows:
09/19/2011 Bought 400 shares IP at $26.978
09/19/2011 Sold 4 IP Oct2011 $28 Calls @ $1.18
10/22/2011 Oct2011 options expired.
Note: the IP price was $25.93 at option expiration.
10/24/2011 Sold 4 IP Nov2011 $27.00 Call Options @ $.73
Note: the price of IP was $26.25 when the options were sold.
11/11/2011 Buy-to-Close 4 Nov2011 $27.00 Calls at $1.86
11/11/2011 Sell-to-Open 5 Dec2011 $28.00 Calls at $1.80
Note: the price of IP was $28.84 when this credit spread was transacted.
11/14/2011 Ex-Div $105.00 = $.2625 * 400 shares

Two possible overall performance results(including commissions) for this International Paper Co.(IP) transaction would be as follows:
Stock Purchase Cost: $10,800.15
= ($26.978*400+$8.95 commission)

Net Profit:
(a) Options Income: +$704.15
= (400*($1.18+$.73-$1.86+$1.80) - 3*$11.95 commissions)
(b) Dividend Income: +$105.00 = $.2625 * 400 shares
(c) Capital Appreciation (If stock assigned at $28.00): +$399.85
= ($28.00-$26.978)*400 - $8.95 commissions

Total Net Profit (If stock assigned at $28.00): +$1,209.00
= (+$704.15 +$105.00 +$399.85)

Absolute Return (If stock assigned at $28.00 at expiration): +11.2%
= +$1,209.00/$10,800.15
Annualized Return (If stock assigned at $28.00): +45.9%
= (+$1,209.00/$10,800.15)*(365/89 days)

This position demonstrates the triple-income potential of covered calls investing; by obtaining profit from all three potential profit sources available to covered calls investors, namely: (1) options income from selling calls; (2) dividend income; and (3) capital appreciation from an increase in the price of the underlying stock. Moreover, in this particular case, a total 11.2% absolute return could be achieved from this 3-month investment (a 45.9% annualized return-on-investment) -- a very attractive result for an investment in a company in the low-growth, mundane Paper and Packaging industry.