Returns for January 2015

January was a very good month for the Covered Calls Advisor Portfolio (CCAP).  As shown in the chart below, CCAP outperformed compared with the benchmark Russell 3000 Index by 4.08 percentage points.  In a month when the Russell 3000 declined by 2.72%, the CCAP increased by 1.36%.  

The primary factors contributing to this outperformance were:             
1.  Overweighted technology and underweighted energy and financials
2.  Overweighted international stocks (especially China and Germany), which outperformed U.S.-based companies
3.  Establishing conservative in-the-money covered calls which provided greater downside protection in the down market during January; and 
4.  Obtained additional protection against a downside move in the market by purchasing an inverse ETF on the S&P 500.

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.

If you have any comments or questions, please email me at the address shown in the right sidebar of this blog site.

Regards and Godspeed,
Jeff

A Commentary on Weekly Options -- January 30th Expiration Results

The Covered Calls Advisor Portfolio (CCAP) contained two positions (in Apple Inc. and Alibaba Group Holding ADR) with January 30th, 2015 expirations.  The Covered Covered Calls Advisor normally establishes monthly options positions, but these two positions were established in the very short-term weekly options.  The Chicago Board Options Exchange (CBOE) calls them 'weeklys', so although I prefer the spelling 'weeklies', I will comply with their preference.  Weeklys are a relatively recent creation, having begun in 2005.  They have continued to grow quickly to the point where there are now over 400 equity weeklys along with an additional approximately 60 ETF weeklys.  But another important requirement (at least for the Covered Calls Advisor) is that there is sufficient open interest  to obtain a reasonably narrow spread between the bid and ask prices in any specific option contract.  The Covered Calls Advisor will only consider selling an option when the bid-ask spread is no more than $.15, so this normally means that there is an existing open interest greater than 250 contracts.  Fortunately, there are now numerous weekly equity and ETF options that meet this threshold.

The decision to sell Weekly or Monthly options is a classic risk versus reward scenario.  When compared with Monthly options, Weeklys offer greater potential annualized return-on-investment possibilities, but can also result in greater annualized ROI losses.  This occurs because of the rate of time decay in the time value (aka extrinsic value) of options.  Note: time value is the dollar value of the option above parity.  The chart below shows that as an option gets closer to expiration, the daily rate of decay in time value increases and continues to increase daily until the date of expiration.     

The Covered Calls Advisor's two January 30, 2015 positions clearly demonstrates the dramatic risk-reward outcomes that can result from Weekly option positions.  Based on annualized return-on-investment results detailed below, the Apple Inc. position (+152.5%) was a great success whereas the Alibaba position (-67.7%) was a failure.  It should be noted that these results were more dramatic than would normally occur with Weeklys since there were quarterly earnings results issued by both Apple and Alibaba during the period when these two positions were held.  Apple had a blowout quarter resulting primarily from the huge sales of the iPhone 6 and 6 Plus and the stock surged higher; whereas in Alibaba's case, both the earnings report (revenues below analysts' expectations) along with China's SAIC report related to a problem with the amount of 'faked goods' on Alibaba's website resulted in a 10% fall in market value.  The increased uncertainty from an upcoming earnings report means increased implied volatility in the options premiums, thus larger return-on-investment outcomes (both positive and negative) than would be the case if there had been no earnings reports during the days when the positions were held.

1. Apple Inc. (AAPL) -- Closed
The transactions are as follows:
01/21/2015 Sold 2 Apple Inc. Jan 30, 2015 $112.00 Puts @ $5.20
Note: the price of AAPL was $108.50 when this transaction was executed
01/30/2015 Two AAPL Put options expired
Note: the price of AAPL stock was $117.16 upon options expiration yesterday

The Covered Calls Advisor does not use margin, so the return-on-investment information on this position and the result shown below reflect the fact that this position was established using 100% cash securitization for the two Put options sold.

The purchase cost (including commissions) for this transaction was as follows:
100% Cash-Secured Cost Basis: $22,400.00
= $112.00*200
Note:  the price of AAPL was $108.50 when these Put options were sold.

Net Profit:
(a) Options Income: +$1,029.55
= ($5.20*200 shares) - $10.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (AAPL closed above $112.00 strike price at Jan 30th, 2015 expiration): +$0.00
= ($112.00 liquidation price since options expired -$112.00 cash-secured cost basis)*200 shares

Total Net Profit (AAPL closed above $112.00 strike so the short options expired worthless): +$1,029.55
= +$1,029.55 options income +$0.00 dividend income +$0.00 capital appreciation

Absolute Return (AAPL closed above $112.00 strike price at Jan 30th, 2015 expiration): +4.6%
= +$1,029.55/$22,400.00
Annualized Return:  +152.5%
=  (+$1,029.55/$22,400.00)*(365/11 days)


2.  Alibaba Group Holding ADR (BABA) -- Closed
The transaction was as follows:
01/14/2015 Sold 1 Alibaba Group ADR Jan30th,2015 $95.00 Put option @ $3.00
Note: the price of BABA was $98.55 today when this transaction was executed.
01/30/2015 One BABA Put option assigned, so 100 shares of Alibaba purchased at $95.00 strike price
Note: the price of BABA was $89.08 upon options expiration yesterday

The purchase cost for this transaction was as follows:
100% Cash-Secured Cost Basis: $9,500.00
= $95.00*100

Net Profit:
(a) Options Income: +$292.30
= ($3.00*100 shares) - $9.70 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If BABA is above $95.00 strike price at Feb2015 expiration): -$592.00
= ($89.08 current market price -$95.00 purchase cost)*100 shares

Total Net Profit: -$299.70
= (+$292.30 +$0.00 -$592.00)

Absolute Return: -3.2%
= -$299.70/$9,500.00
Annualized Return (If BABA is above $95.00 at expiration): -67.7%
= (-$299.70/$9,500.00)*(365/17 days)

Established New Short 100% Cash-Secured Puts Position in Avis Budget Group Inc.

Today, the Covered Calls Advisor established a new position in the Avis Budget Group Inc. (ticker symbol CAR) by selling 2 Feb2015 $55.00 Put options.  This advisor has been waiting for the stock to decline below $60 before establishing a position.  With the large decline in the overall market today, this opportunity was realized.  A conservative (8% out-of-the-money) short Puts position  was established because of the increased uncertainty surrounding Avis Budget's 4th quarter earnings report, which will be issued a couple of days prior to the Feb2015 expiration date.  Of course, a potential benefit accompanying this uncertainty is the increased implied volatility (and thus enhanced return-on-investment potential) now available.   

As detailed below, this investment will yield a +1.5% absolute return in 26 days (which is equivalent to a +21.1% annualized return-on-investment) if Avis Budget stock closes above the $55.00 strike price on the Feb 20th options expiration date.


1.  Avis Budget Group Inc. (CAR) -- New Position
The transaction was as follows:
01/27/2015 Sold 2 Avis Budget Group Inc. Feb2015 $55.00 Puts @ $.88
Note: The price of CAR was $59.90 when this transaction was executed.

The Covered Calls Advisor does not use margin, so the detailed information on this position and some potential results shown below reflect the fact that this position was established using 100% cash securitization for the two Put options sold.

A possible overall performance result (including commissions) for this transaction would be as follows:
100% Cash-Secured Cost Basis: $11,000.00
= $55.00*200
Note:  the price of CAR was $59.90 when these Put options were sold.

Net Profit:
(a) Options Income: +$165.55
= ($.88*200 shares) - $10.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If CAR is above $55.00 strike price at Feb2015 expiration): +$0.00
= ($55.00-$55.00)*200 shares

Total Net Profit (If CAR is above $55.00 strike price at Feb2015 options expiration): +$165.55
= (+$165.55 +$0.00 +$0.00)

Absolute Return (If CAR is above $55.00 strike price at Feb2015 options expiration): +1.5%
= +$165.55/$11,000.00
Annualized Return (If CAR is above $55.00 at expiration): +21.1%
= (+$165.55/$11,000.00 )*(365/26 days)

The downside 'breakeven price' at expiration is at $54.12 ($55.00 - $.88), which is 9.6% below the current market price of $59.90.
The 'crossover price' at expiration is $60.78 ($59.90 + $.88).  This is the price above which it would have been more profitable to simply buy-and-hold Avis Budget stock until Feb 20th (the Feb2015 options expiration date) rather than selling these Put options.

Established Short 100% Cash-Secured Puts Position in Apple Inc

The Covered Calls Advisor established a short position by selling two Apple Inc. (Symbol AAPL) Jan30th, 2015 $112.00 Put options.  This position expires after the Jan 27th earnings report, so the implied volatility of the options was substantially higher than would be the case if there was not an earnings release prior to expiration.  Preliminary indications from several sources presage that iPhone 6 sales exceeded analyst expectations during the December-ending quarter, so an aggressive in-the-money short Puts position was established.
As detailed below, this investment will yield a +1.0% absolute return in 11 days (which is equivalent to a +34.0% annualized return-on-investment) if Apple closes at the $108.50 price when this position was established today.  If it rises to close above the $112.00 strike price, a +4.6% absolute return (equivalent to a +152.5% annualized return-on-investment) will be achieved.
The details are provided below.

1. Apple Inc. (AAPL)
The transaction was as follows:
01/21/2015 Sold 2 Apple Inc. Jan 30, 2015 $112.00 Puts @ $5.20
Note: The price of AAPL was $108.50 when this transaction was executed

The Covered Calls Advisor does not use margin, so the return-on-investment information on this position and some potential results shown below reflect the fact that this position was established using 100% cash securitization for the two Put options sold.

The purchase cost (including commissions) for this transaction was as follows:
100% Cash-Secured Cost Basis: $22,400.00
= $112.00*200
Note:  the price of AAPL was $108.50 when these Put options were sold.

Net Profit:
(a) Options Income: +$1,029.55
= ($5.20*200 shares) - $10.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If AAPL closes unchanged at $108.50 at Jan 30th, 2015 expiration): -$800.00
= ($108.50 if price unchanged at expiration -$112.00 cash-secured cost basis)*200 shares; OR
(c) Capital Appreciation (If AAPL closes above $112.00 strike price at Jan 30th, 2015 expiration): +$0.00
= ($112.00 liquidation price if assigned -$112.00 cash-secured cost basis)*200 shares

1. Total Net Profit (If AAPL closes unchanged at $108.50 at Jan 30th, 2015 expiration): +$229.55
= (+$1,029.55 options income +$0.00 dividend income -$800.00 capital appreciation); OR
2. Total Net Profit (AAPL closed above $112.00 strike so the short options expired worthless): +$1,029.55
= (+$1,029.55 options income +$0.00 dividend income +$0.00 capital appreciation)

1. Absolute Return (If AAPL closes unchanged at $108.50 at Jan 30th, 2015 expiration): +1.0%
= +$229.55/$22,400.00
Annualized Return:  +34.0%
=  (+$229.55/$22,400.00)*(365/11 days); OR
2. Absolute Return (If AAPL closes above $112.00 strike price at Jan 30th, 2015 expiration): +4.6%
= +$1,029.55/$22,400.00
Annualized Return:  +152.5%
=  (+$1,029.55/$22,400.00)*(365/11 days)

Continuing Positions --Alibaba Group, Google, and Williams Companies

Covered call positions were established in the Covered Calls Advisor portfolio for three companies (Alibaba Group ADR, Google Inc., and Williams Companies Inc.) where, in each instance, the Jan2015 options expired worthless last Friday when the stock prices closed below the strike prices.  Today, for all three positions, covered calls positions were established by selling Call options for the Feb2015 options expiration against the existing long stock positions. The transactions to-date for these positions and the respective potential return-on-investment results are detailed below:

1.  Alibaba Group ADR  (Ticker BABA) --Continuation
The transactions are as follows:
12/16/2014 Sold 2 out-of-the-money Jan2015 $100.00 Put options @ $2.60
Note: The price of Alibaba stock was $105.51 when this transaction was executed.
01/16/2015 2 BABA Jan2015 Put options expired
Note: the price of Alibaba was $96.89 upon Jan2015 options expiration.
01/21/2015 Sold 2 Feb2015 $100.00 Call options @ $4.65
Note: BABA stock was $101.20 when these options were sold.

A possible overall performance result (including commissions) for this Alibaba position would be as follows:
100% Cash-Secured Cost Basis: $20,000.00 = $100.00*200

 Net Profit:
(a) Options Income: +$1,429.10
= ($2.60+$4.65)*200 shares - 2*$10.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Alibaba closes above $100.00 at the Feb2015 options expiration): +$0.00
= ($100.00 liquidation price if assigned -$100.00 cash-secured cost basis)*200 shares

Total Net Profit (If Alibaba is above $100.00 strike price upon Feb2015 options expiration): +$1,429.10 
= (+$1,429.10 +$0.00 +$0.00)

Absolute Return (If Alibaba is above $100.00 at Feb2015 options expiration): +7.1%
= +$1,429.10/$20,000.00
Annualized Return (If Alibaba is above $100.00 at expiration): +39.5%
= (+$1,429.10/$20,000.00)*(365/66 days)


2.  Google Inc. (GOOG) -- Continuation

The transactions are as follows:
12/09/2014 Sold 1 Jan2015 $530.00 Put @ $18.20
Note: The price of Google was $522.64 when this transaction was executed.

A possible overall performance result (including commissions) for this Google transaction would be as follows:
100% Cash-Secured Cost Basis: $53,000.00
= $530.00*100
Note:  the price of GOOG was $522.64 when the Put option was sold.
01/16/2015 1 GOOG Jan2015 Put options expired
Note: the price of Google stock was $508.08 upon Jan2015 options expiration.
01/21/2015 Sold 1 Feb2015 $520.00 Call option @ $10.20
Note: Google Inc. stock was $509.22 when this Call option was sold.

Net Profit:
(a) Options Income: +$2,820.60
= ($18.20+$10.20)*100 shares - 2*$9.70 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If GOOG closes above $520.00 at Feb2015 expiration): -$1,008.95
= ($520.00 liquidation cost if assigned - $530.00 cash-secured cost basis)*100 shares - $8.95 commission

Total Net Profit (If GOOG is above $520.00 strike price at Feb2015 options expiration): +$1,811.65 
= (+$2,820.60 +$0.00 -$1,008.95)

Absolute Return (If GOOG is above $520.00 at Feb2015 options expiration): +3.4%
= +$1,811.65/$53,000.00
Annualized Return (If GOOG is above $520.00 at expiration): +17.1%
= (+$1,811.65/$53,000.00)*(365/73 days)


3.  Williams Companies Inc. (WMB) -- Continuation
The transactions are as follows:
12/31/2014 Sold 3 Williams Companies Inc. Jan2015 $44.00 Puts @ $.90
Note: The price of WMB was $44.96 when this transaction was executed.
01/16/2015 3 WMB Jan2015 Put options expired
Note: the price of Williams Companies was $42.00 upon Jan2015 options expiration.
01/21/2015 Sold 3 Feb2015 $44.00 Call options @ $.98
Note: WMB stock was $42.49 when these options were sold.

Two possible overall performance results (including commissions) for these transactions would be as follows:
100% Cash-Secured Cost Basis: $13,200.00
= $44.00*300
Note:  the price of WMB was $44.96 when these Put options were sold.

Net Profit:
(a) Options Income: +$541.60
= ($.90 + $.98)*300 shares - 2*$11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If WMB closes at current price of $42.49 at Feb2015 expiration): -$453.00
= ($42.49 if price unchanged at expiration -$44.00 cash-secured cost basis)*300 shares; OR
(c) Capital Appreciation (If WMB is above $44.00 strike price at Feb2015 expiration): +$0.00
= ($44.00 liquidation price if assigned -$44.00 cash-secured cost basis)*300 shares

1. Total Net Profit (If WMB closes at current price of $42.49 at Feb2015 expiration): +$88.60
= (+$541.60 +$0.00 -$453.00); OR
2. Total Net Profit (If WMB is above $44.00 strike price at Jan2015 options expiration): +$541.60
= (+541.60 +$0.00 +$0.00)

1. Absolute Return (If WMB closes at current price of $42.49 at Feb2015 expiration): +0.7%
= +$88.60/$13,200.00
Annualized Return (If WMB closes at current price of $42.49 at Feb2015 expiration): +4.8%
= (+$88.60/$13,200.00)*(365/51 days); OR
2. Absolute Return (If WMB is above $44.00 strike price at Feb2015 options expiration): +4.1%
= +$541.60/$13,200.00
Annualized Return (If WMB above $44.00 at expiration): +29.4%
= (+$541.60/$13,200.00)*(365/51 days)

Established Continuing Covered Calls Position in iShares MSCI Germany ETF

Today, three Feb2015 $27.00 call options were sold against the 300 long iShares MSCI Germany ETF shares (ticker symbol EWG) held in the Covered Calls Advisor Portfolio. The transactions to date for this position and a potential return-on-investment result are detailed below:

iShares MSCI Germany ETF (EWG) -- Continuation
The transactions are as follows:
12/02/2014 Sold 3 iShares MSCI Germany ETF Dec2014 $29.00 Puts @ $.70
Note: The price of EWG was $28.57 when this transaction was executed.
12/26/2014 Sold 3 EWG Jan2015 $28.00 Call options @ $.60
Note: the price of EWG was $28.24 when these options were sold.
12/16/2015 Jan2015 EWG Call options expired
12/20/2015 Sold 3 EWG Feb2015 $27.00 Call options @ $1.15
Note: the price of EWG was $27.72 when this transaction was executed.


A possible overall performance result (including commissions) for this transaction would be as follows:
100% Cash-Secured Cost Basis: $8,700.00
= $29.00*300


Net Profit:
(a) Options Income: +$701.40
= ($.70+$.60+$1.15)*300 shares - 3*$11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If EWG is above $27.00 strike price at Feb2015 expiration): -$608.95
= ($27.00-$29.00)*300 shares - $8.95 commissions

Total Net Profit (If EWG is above $27.00 strike price at Feb2015 options expiration): +$92.45 
= (+$701.40 +$0.00 -$608.95)

Absolute Return (If EWG is above $27.00 strike price at Feb2015 options expiration): +1.1%
= +$92.45/$8,700.00
Annualized Return: +4.8%
= (+$92.45/$8,700.00)*(365/80 days)

General Electric Co. Position Closed

The Jan2015 covered calls position in the General Electric Company expired last Friday with the stock below the $24.00 strike price.  Today, the position was closed out by selling the 300 shares in the Covered Calls Advisor portfolio.  As detailed below, this investment yielded a +0.5% absolute return in 14 days (which is equivalent to a +13.9% annualized return-on-investment). The associated transactions and financial results are:

General Electric Company (GE) -- Closed
The transactions were as follows:
01/06/2015 Sold 4 General Electric Co Jan2015 $24.00 Puts @ $.34
Note: The price of GE was $24.00 when this transaction was executed.
01/20/2015 Sold 400 GE shares @ $23.84

The Covered Calls Advisor does not use margin, so the detailed information on this position and the results shown below reflect the fact that this position was established using 100% cash securitization for the four Put options sold.

The overall performance result (including commissions) for this transaction was as follows:
100% Cash-Secured Cost Basis: $9,600.00
= $24.00*400
Note:  the price of GE was $24.00 when these Put options were sold.

Net Profit:
(a) Options Income: +$124.05
= ($.34*400 shares) - $11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation: -$72.95
= ($23.84-$24.00)*400 shares - $8.95 commission

Total Net Profit: +$51.10
= (+$124.05 +$0.00 -$72.95)

Absolute Return: +0.5%
= +$51.10/$9,600.00
Annualized Return: +13.9%
= (+$51.10/$9,600.00 )*(365/14 days)

Established New Short 100% Cash-Secured Puts Position in Hertz Global Holdings Inc.

Today, the Covered Calls Advisor established a new position in the Hertz Global Holdings Inc. (ticker symbol HTZ) by selling 4 Feb2015 $20.00 Put options.  As detailed below, this investment will yield a +4.1% absolute return in 33 days (which is equivalent to a +45.4% annualized return-on-investment) if Hertz stock closes above the $20.00 strike price on the Feb 20th options expiration date.  The transaction and a potential return-on-investment result is:

1.  Hertz Global Holdings Inc. (HTZ) -- New Position
The transaction was as follows:
01/20/2015 Sold 4 Hertz Global Holdings Inc. Jan2015 $20.00 Puts @ $.85
Note: The price of HTZ was $20.72 when this transaction was executed.

The Covered Calls Advisor does not use margin, so the detailed information on this position and some potential results shown below reflect the fact that this position was established using 100% cash securitization for the four Put options sold.

A possible overall performance result (including commissions) for this transaction would be as follows:
100% Cash-Secured Cost Basis: $8,000.00
= $20.00*400
Note:  the price of HTZ was $20.72 when these Put options were sold.

Net Profit:
(a) Options Income: +$328.05
= ($.85*400 shares) - $11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If HTZ is above $20.00 strike price at Feb2015 expiration): +$0.00
= ($20.00-$20.00)*400 shares

Total Net Profit (If HTZ is above $20.00 strike price at Feb2015 options expiration): +$328.05
= (+$328.05 +$0.00 +$0.00)

Absolute Return (If HTZ is above $20.00 strike price at Feb2015 options expiration): +4.1%
= +$328.05/$8,000.00
Annualized Return (If HTZ is above $20.00 at expiration): +45.4%
= (+$328.05/$8,000.00)*(365/33 days)

The downside 'breakeven price' at expiration is at $19.15 ($20.00 - $.85), which is 7.2% below the current market price of $20.72.
The 'crossover price' at expiration is $21.57 ($20.72 + $.85).  This is the price above which it would have been more profitable to simply buy-and-hold HTZ until Feb 20th (the Feb2015 options expiration date) rather than selling these Put options.

Established Two New Positions in iShares China Large-Cap ETF and United Continental Holdings Inc.

Today, the Covered Calls Advisor established new positions in iShares China Large-Cap ETF (ticker symbol FXI) and United Continental Holdings Inc. (ticker symbol UAL) by selling Feb2015 options. Both positions are conservative ones in that they have substantial downside protection.

The iShares China Large-Cap ETF is a covered calls position established at the $40.00 strike price and the United Continental position is a short 100% cash-secured Puts position at the $60.00 strike price.  As detailed below, the iShares China investment will yield a +1.3% absolute return in 33 days (which is equivalent to a +14.5% annualized return-on-investment) if FXI closes above the $40.00 strike price on the Feb2015 options expiration date.  The United Continental position would provide a +2.4% absolute return over the same 33 day time period (which is equivalent to a +27.0% annualized return-on-investment).

The transactions and potential return-on-investment results are detailed below:

1.  iShares China Large-Cap ETF (FXI) -- New Position The transactions were as follows:
01/20/2015  Bought 400 iShares China Large-Cap ETF shares @ $41.63
01/20/2015 Sold 4 FXI Feb2015 $40.00 Call options @ $2.23
Note: The price of FXI was $41.63 today when this transaction was executed.

A possible overall performance result (including commissions) would be as follows:
Bought 400 share FXI: $16,660.95
= $41.63*400 + $8.95 commission

Net Profit:
(a) Options Income: +$880.05
= ($2.23*400 shares) - $11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If FXI is above $40.00 strike price at Feb2015 expiration): -$660.95
= ($40.00-$41.63)*400 shares - $8.95 commissions

Total Net Profit (If FXI is above $40.00 strike price at Feb2015 options expiration): +$219.10
= (+$880.05 +$0.00 -$660.95)

Absolute Return (If FXI is above $40.00 strike price at Feb2015 options expiration): +1.3%
= +$219.10/$16,660.95
Annualized Return (If FXI is above $40.00 at expiration): +14.5%
= (+$219.10/$16,660.95)*(365/33 days)

The downside 'breakeven price' at expiration is at $39.40 ($41.63-$2.23), which is 5.4% below the current market price of $41.63.
The 'crossover price' at expiration is $42.23 ($40.00 + $2.23).  This is the price above which it would have been more profitable to simply buy-and-hold FXI until Feb 20th (the Feb2015 options expiration date) rather than establishing this covered calls position.

2.  United Continental Holdings Inc. (UAL) -- New Position
The transactions were as follows:
01/20/2015  Sold 3 UAL 100% cash-secured $60.00 Put options @ $1.50
Note: The price of UAL was $67.25 today when this transaction was executed.
The Covered Calls Advisor does not use margin, so the detailed information on this position and some potential results shown below reflect the fact that both of these positions were established using 100% cash securitization for the Put options sold.

A possible overall performance result (including commissions) would be as follows:
100% Cash-Secured Cost Basis: $18,000.00
= $60.00*300


Net Profit:
(a) Options Income: +$438.80
= ($1.50*300 shares) - $11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If UAL is above $60.00 strike price at Feb2015 expiration): +$0.00
= ($60.00-$60.00)*300 shares

Total Net Profit (If UAL is above $60.00 strike price at Feb2015 options expiration): +$438.80
= (+$438.80 +$0.00 +$0.00)

Absolute Return (If UAL is above $60.00 strike price at Feb2015 options expiration): +2.4%
= +$438.80/$18,000.00
Annualized Return (If AA is above $14.00 at expiration): +27.0%
= (+$438.80/$18,000.00)*(365/33 days)

The downside 'breakeven price' at expiration is at $58.50 ($60.00 - $1.50), which is 13.0% below the current market price of $67.25.
The 'crossover price' at expiration is $68.75 ($67.25 + $1.50).  This is the price above which it would have been more profitable to simply buy-and-hold UAL until Feb 20th (the Feb2015 options expiration date) rather than selling these Put options.

January 2015 Expiration Results

The Covered Calls Advisor Portfolio (CCAP) contained nine positions with January 2015 expirations.  The results are as follows:

- Four of the nine positions (Agnico Eagle Mines Ltd., Anadarko Petroleum Corp., AT&T Inc., and iShares MSCI China Large Cap ETF) were closed out at expiration. This was the optimal result for these positions in that the maximum potential return-on-investment (ROI) results was achieved from when each of these positions was established.  The annualized ROI for these closed positions are:

• Agnico Eagle Mines Ltd. = +5.3% absolute return (equivalent to +16.7% annualized return for the 115 days holding period)
• Anadarko Petroleum Corp. = +1.2% absolute return (equivalent to +53.4% annualized return for the 8 days holding period)
• AT&T Inc. = +2.0% absolute return (equivalent to +18.5% annualized return for the 40 days holding period)
• iShares MSCI China Large Cap ETF = +1.8% absolute return (equivalent to +25.3% annualized return for the 26 days holding period)

The detailed transactions history and results for each of these positions is detailed below. The cash available from the closing of these positions will be retained in the Covered Calls Advisor Portfolio until new covered calls and/or 100% cash-secured puts positions are established.

- Five of the nine positions (Alibaba Group Holding ADS, GE Company, iShares MSCI Germany ETF, Google Inc., and The Williams Companies, Inc.) ended at expiration with the price of the stocks below the strike prices.  So the respective options expired and the long shares are now retained in the Covered Calls Advisor Portfolio.  A decision will be made soon to either sell these shares or to establish a covered calls position by selling Feb2015 call options against the current long stock holdings. When these decisions are made and the accompanying transactions are completed, a post will be made on this blog on the same day along with the detailed transactions to-date for each stock position.

Details of the four closed positions summarized above and the associated return-on-investment results are as follows:

1. Agnico Eagle Mines Ltd. (AEM) -- Closed
 The transactions are as follows:
09/24/2014 Sold 3 Oct2014 $30.00 Puts @ $1.10
Note: The price of Agnico Eagle was $30.03 when this transaction was executed.
10/17/2014 3 Oct2014 $30.00 Puts expired
Note: the price of AEM was $28.72 when these Puts expired
10/20/2014 Sold 3 Nov2014 $30.00 Calls @ $1.75
Note: the price of AEM was $29.55 when these options were sold.
11/21/2014 3 Nov2014 Call options expired
Note: the price of AEM was $26.64 today upon Nov2014 options expiration
11/26/2014 Ex-Dividend of $24.00 ($.08 per share x 300 shares)
12/09/2014 Sold 3 AEM Dec2014 $27.50 Call options @ $.35
Note: the price of AEM was $25.52 when these 3 Call options were sold.
12/20/2014 3 Dec2014 $27.50 Call options expired
01/05/2015 Sold 3 AEM Jan2015 $27.50 Call options @ $1.03
Note: the price of AEM was $27.25 when these Call options were sold.
01/16/2015 3 AEM Jan2015 $27.50 Call options expired
Note: the price of AEM was $32.22 upon options expiration

The overall performance result (including commissions) for this Agnico Eagle Mines position was as follows:
100% Cash-Secured Cost Basis: $9,000.00 = $30.00*300
Note: the price of AEM was $30.03 when these Put options were sold.

Net Profit:
(a) Options Income: +$1,224.20
= ($1.10+$1.75+$.35+$1.03)*300 shares - 4*$11.20 commissions
(b) Dividend Income: +$24.00 = ($.08/share x 300 shares)
(c) Capital Appreciation (AEM closed above $27.50 at Jan2015 expiration): -$750.00
= ($27.50-$30.00)*300 shares

Total Net Profit (AEM was above $27.50 strike price at Jan2015 options expiration): +$474.20 
= (+$1,224.20 +$0.00 -$750.00)

Absolute Return: +5.3%
= +$474.20/$9,000.00
Annualized Return: +16.7%
= (+$474.20/$9,000.00)*(365/115 days)



2. Anadarko Petroleum Corp. (APC) -- Closed
The transaction was as follows:
01/09/2015 Sold 2 Anadarko Petroleum Corporation Jan2015 $75.00 Puts @ $.93
Note: The price of APC was $77.90 today when this transaction was executed.
01/16/2015 3 APC Jan2015 $75.00 Put options expired
Note: the price of APC was $78.45 upon options expiration

The overall performance result (including commissions) for this transaction was:
100% Cash-Secured Cost Basis: $15,000.00
= $75.00*200
Note:  the price of APC was $77.90 when these Put options were sold.

Net Profit:
(a) Options Income: +$175.55
= ($.93*200 shares) - $9.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (APC closed above $75.00 strike price at Jan2015 expiration): +$0.00
= ($75.00-$75.00)*200 shares

Total Net Profit: +$175.55
= (+$175.55 +$0.00 +$0.00)

Absolute Return: +1.2%
= +$175.55/$15,000.00
Annualized Return: +53.4%
= (+$175.55/$15,000.00)*(365/8 days)


3. AT&T Inc. (T) -- Closed
The transaction is as follows:
12/09/2014 Sold 4 out-of-the-money Jan2015 $32.00 Put options @ $.68
Note: The price of AT&T was $32.77 when this transaction was executed.
01/16/2015 4 AT&T Jan2015 $32.00 Call options expired
Note: the price of AT&T was $33.80 upon options expiration

The overall performance result (including commissions) for this AT&T transaction was:
100% Cash-Secured Cost Basis: $12,800.00 = $32.00*400
Note:  the price of AT&T was $32.77 when the Put options were sold.

Net Profit:
(a) Options Income: +$260.05
= ($.68*400 shares) - $11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (AT&T closed above $32.00 at the Jan2015 options expiration): +$0.00
= ($32.00-$32.00)*400 shares

Total Net Profit: +$260.05 
= (+$260.05 +$0.00 +$0.00)

Absolute Return: +2.0%
= +$260.05/$12,800.00
Annualized Return: +18.5%
= (+$260.05/$12,800.00)*(365/40 days)


4. iShares MSCI China Large Cap ETF (FXI) -- Closed
The transaction was as follows:
12/22/2014 Sold 4 iShares China Large-Cap ETF Jan2015 $40.00 Puts @ $.75
Note: The price of FXI was approximately $41.06 when this transaction was executed.
01/16/2015 4 FXI Jan2015 $40.00 Call options expired
Note: the price of FXI was $42.22 upon options expiration

The overall performance result (including commissions) for this transaction was:
100% Cash-Secured Cost Basis: $16,000.00
= $40.00*400
Note:  the price of FXI was $41.06 when these Put options were sold.

Net Profit:
(a) Options Income: +$288.05
= ($.75*400 shares) - $11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (FXI was above $40.00 strike price at Jan2015 expiration): +$0.00
= ($40.00-$40.00)*400 shares

Total Net Profit:+$288.05
= +$288.05 +$0.00 +$0.00

Absolute Return: +1.8%
= +$288.05/$16,000.00
Annualized Return: +25.3%
= (+$288.05/$16,000.00)*(365/26 days)

Halliburton Co. Covered Calls Position Closed

Today, the covered calls position in Halliburton Co.(ticker symbol HAL) at the $40 strike price and for today's expiration was unwound. The 3 short Call options were bought back and the 300 shares of HAL stock were simultaneously sold. As shown below, the absolute return was +6.6% which is equivalent to an annualized return-on-investment of +68.6% for the 35 days that this investment was held.  The details of the transactions and the financial results are detailed below:

Halliburton Co. (HAL) -- Position Closed
The transactions were as follows:
12/12/2014 Bought 300 HAL shares @ $37.59
12/12/2014 Sold 3 HAL Jan2015 $40.00 Call Options @ $1.30
Note: the price of HAL was $37.59 today when these options were sold.
01/16/2015 Bought-to-Close 3 HAL Jan2015 $40.00 Call Options @ $.03
01/16/2015 Sold 300 HAL shares @ $38.93

The overall performance result (including commissions) for these Halliburton covered calls was:
Stock Purchase Cost: $11,285.95
= ($37.59*300+$8.95 commission)

Net Profit:
(a) Options Income: +$358.60
= 300*($1.30-$.03) - 2*$11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation = +$384.10
= ($38.93-$37.59)*300 - 2*$8.95 commissions

Total Net Profit: +$742.70
= (+$358.60 +$0.00 +$384.10)

Absolute Return: +6.6%
= +$742.70/$11,285.95
Annualized Return: +68.6%
= (+$742.70/$11,285.95)*(365/35 days)

Sold Out Half of the Long Position in ProShares Short S&P500 Index

Today, the Covered Calls Advisor reduced the short position against the S&P 500 that was established in December on the same day as the Covered Calls Advisor's "Overvaluation Alert" (Click to view) was issued.

As shown below, 500 of the 1,000 shares in ProShares Short S&P500 Index (ticker symbol SH) were sold today.  The result was a +3.1% absolute return (equivalent to a +41.7% annualized return-on-investment) during the 27 day period that the 500 shares were held.  The detailed results for this position are:

Sold 500 Shares of ProShares Short S&P500 Index (SH)
The transactions were as follows:
12/19/2014 Bought 1,000 ProShares Short S&P 500 Index (SH) Shares @ $21.68
01/15/2015 Sold 500 SH @ $22.35
Note: 500 long SH shares are retained in the Covered Calls Advisor Portfolio

The performance result (including commissions) for this Short S&P500 position was:
Stock Purchase Cost: $10,848.95
= ($21.68*500+$8.95 commission)

Net Profit: $335.00
= ($22.35-$21.68)*500 shares

Absolute Return: +3.1%
= +$335.00/$10,848.95
Annualized Return: +41.7%
= ( +$335.00/$10,848.95)*(365/27 days)

Established New Short 100% Cash-Secured Puts Positions in Alcoa Inc. and Alibaba Group ADR

Today, the Covered Calls Advisor established new positions in Alcoa Inc.(ticker symbol AA) and Alibaba Group ADR (ticker symbol BABA) by selling Feb2015 Put options. Both positions are conservative ones in that they have substantial downside protection.  As detailed below, the Alcoa investment will yield a +2.5% absolute return in 39 days (which is equivalent to a +23.4% annualized return-on-investment) if Alcoa closes above the $14.00 strike price on the Feb2015 options expiration date.  The Alibaba Group position would provide a +3.1% absolute return over the same 39 day time period which is equivalent to a +28.8% annualized return-on-investment.

The Covered Calls Advisor does not use margin, so the detailed information on this position and some potential results shown below reflect the fact that both of these positions were established using 100% cash securitization for the Put options sold.

The transactions and potential return-on-investment results are detailed below:

1.  Alcoa Inc.(AA) -- New Position
The transaction was as follows:
01/14/2015 Sold 4 Alcoa Inc. Feb2015 $14.00 Puts @ $.38
Note: The price of AA was $14.78 today when this transaction was executed.

A possible overall performance result (including commissions) for this transaction would be as follows:
100% Cash-Secured Cost Basis: $5,600.00
= $14.00*400
Note:  the price of AA was $14.78 when these Put options were sold.

Net Profit:
(a) Options Income: +$140.05
= ($.38*400 shares) - $11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If AA is above $14.00 strike price at Feb2015 expiration): +$0.00
= ($14.00-$14.00)*400 shares

Total Net Profit (If AA is above $14.00 strike price at Feb2015 options expiration): +$140.05
= (+$140.05 +$0.00 +$0.00)

Absolute Return (If AA is above $14.00 strike price at Feb2015 options expiration): +2.5%
= +$140.05/$5,600.00
Annualized Return (If AA is above $14.00 at expiration): +23.4%
= (+$140.05/$5,600.00)*(365/39 days)

The downside 'breakeven price' at expiration is at $13.62 ($14.00 - $.38), which is 7.8% below the current market price of $14.78.
The 'crossover price' at expiration is $15.16 ($14.78 + $.38).  This is the price above which it would have been more profitable to simply buy-and-hold AA until Feb 20th (the Feb2015 options expiration date) rather than selling these Put options.

2.  Alibaba Group Holding ADR (BABA) -- New Position
The transaction was as follows:
01/14/2015 Sold 1 Alibaba Group ADR Feb2015 $95.00 Put @ $3.00
Note: The price of BABA was $98.55 today when this transaction was executed.

A possible overall performance result (including commissions) for this transaction would be as follows:
100% Cash-Secured Cost Basis: $9,500.00
= $95.00*100
Note:  the price of  BABA was $98.55 when thise Put option was sold.

Net Profit:
(a) Options Income: +$292.30
= ($3.00*100 shares) - $9.70 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If BABA is above $95.00 strike price at Feb2015 expiration): +$0.00
= ($95.00-$95.00)*100 shares

Total Net Profit (If BABA is above $95.00 strike price at Feb2015 options expiration): +$292.30
= (+$292.30 +$0.00 +$0.00)

Absolute Return (If BABA is above $95.00 strike price at Feb2015 options expiration): +3.1%
= +$292.30/$9,500.00
Annualized Return (If BABA is above $95.00 at expiration): +28.8%
= (+$292.30/$9,500.00)*(365/39 days)

The downside 'breakeven price' at expiration is at $92.00 ($95.00 - $3.00), which is 6.6% below the current market price of $98.55.
The 'crossover price' at expiration is $101.55 ($98.55 + $3.00).  This is the price above which it would have been more profitable to simply buy-and-hold Alibaba until Feb 20th (the Feb2015 options expiration date) rather than selling this Put option.

Country Value Rankings

A comprehensive approach to asset allocation extends beyond diversification solely by asset classes (i.e. stocks, bonds, real estate, commodities, etc.). It should also include diversification by global geography. Behavioral finance research has clearly identified the profound tendency of most investors to succumb to "home-country bias". Legendary investor John Templeton was a leading advocate for developing a globally oriented value investing perspective to achieve investing outperformance.

The Covered Calls Advisor has developed a method for determining the relative investing worthiness of twenty countries and two regions around the world.  The "Country Value Rankings" table below is based on a weighted-average ranking system.  The eight factors used to calculate these rankings are as follows:

Today's results, shown in the table below, provides a value-oriented and objective framework that assists this advisor to make decisions regarding overweighting and underweighting specific countries and regions in the Covered Calls Advisor's Portfolio.

From the chart above, the resulting overall market ratings for individual countries and regions are:
Very Bullish (Above 25 total points) -- None
Bullish (20-25 points) -- Singapore and China
Slightly Bullish (15-20 points) -- South Korea, Switzerland, Taiwan, Emerging Markets, Sweden, and Hong Kong
Neutral (10-15 points) -- Malaysia, Germany, Australia, Russia, EurAsia, U.S., and United Kingdom
Slightly Bearish -- Canada, Italy, Spain, France, Mexico, and Japan
Bearish -- South Africa
Very Bearish -- India and Brazil


Future investments in the Covered Calls Advisor Portfolio will be overweighted in these higher rated countries. It should also be noted that the U.S. is currently ranked 14th of the 24 ratings and the overall rating for the U.S. is Neutral.

This Country Value Rankings spreadsheet is detailed in terms of both the methodology used and the resources used to capture the information for each country. If you are interested in these details and would like further information or clarification, please email your comments and questions (to the address in the top right sidebar of this blog). They are always welcomed.

Hopefully, this information is helpful in your thinking and analysis of your own equities selection methods related to your covered calls investing process!

Regards and Godspeed to All,
Jeff

Short 100% Cash-Secured Puts Position in Apple Inc. -- Closed

The Covered Calls Advisor's short position in two Apple Inc. (Symbol AAPL) Jan9th2015 $105.00 Weekly Put options expired yesterday since Apple Inc. closed above the $105.00 strike price. This result achieved the maximum profit potential from this Weekly position of +1.0% absolute return (+74.2% annualized) for the 5 days holding period. This transaction and the return-on-investment result is detailed below

Apple Inc. (AAPL) -- Closed
The transaction was as follows:
01/05/2015 Sold 2 Apple Inc. Jan 9, 2015 $105.00 Puts @ $1.12
Note: The price of AAPL was $106.53 when this transaction was executed
01/09/2015 2 AAPL Jan 9th $105.00 short Put options expired
Note: the price of AAPL was $112.01 upon options expiration yesterday

The Covered Calls Advisor does not use margin, so the return-on-investment information on this position and some potential results shown below reflect the fact that this position was established using 100% cash securitization for the two Put options sold.

The overall performance result (including commissions) for this transaction was as follows:
100% Cash-Secured Cost Basis: $21,000.00
= $105.00*200
Note:  the price of AAPL was $106.53 when these Put options were sold.

Net Profit:
(a) Options Income: +$213.55
= ($1.12*200 shares) - $10.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (AAPL closed above the $105.00 strike price at Jan 9th, 2015 expiration): +$0.00
= ($105.00-$105.00)*200 shares

Total Net Profit (AAPL closed above $105.00 strike so the short options expired worthless): +$213.55
= (+$213.55 +$0.00 +$0.00)

Absolute Return: +1.0%
= +$213.55/$21,000.00
Annualized Return:  +74.2%
=  (+$213.55/$21,000.00)*(365/5 days)

Established New Short 100% Cash-Secured Puts Position in Anadarko Petroleum Corporation

Today, the Covered Calls Advisor established a new position in Anadarko Petroleum Corp.(ticker symbol APC) by selling 2 Jan2015 $75.00 Put options.  As detailed below, this investment will yield a +1.2% absolute return in 8 days (which is equivalent to a +53.4% annualized return-on-investment) if APC closes above the $75.00 strike price a week from today on the Jan 16th options expiration date.  The transaction and a potential return-on-investment result is:

1.  Anadarko Petroleum Corp. (APC) -- New Position
The transaction was as follows:
01/09/2015 Sold 2 Anadarko Petroleum Corporation Jan2015 $75.00 Puts @ $.93
Note: The price of APC was $77.90 today when this transaction was executed.

The Covered Calls Advisor does not use margin, so the detailed information on this position and some potential results shown below reflect the fact that this position was established using 100% cash securitization for the two Put options sold.

A possible overall performance result (including commissions) for this transaction would be as follows:
100% Cash-Secured Cost Basis: $15,000.00
= $75.00*200
Note:  the price of APC was $77.90 when these Put options were sold.

Net Profit:
(a) Options Income: +$175.55
= ($.93*200 shares) - $9.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If APC is above $75.00 strike price at Jan2015 expiration): +$0.00
= ($75.00-$75.00)*200 shares

Total Net Profit (If APC is above $75.00 strike price at Jan2015 options expiration): +$175.55
= (+$175.55 +$0.00 +$0.00)

Absolute Return (If APC is above $75.00 strike price at Jan2015 options expiration): +1.2%
= +$175.55/$15,000.00
Annualized Return (If APC is above $75.00 at expiration): +53.4%
= (+$175.55/$15,000.00)*(365/8 days)

The downside 'breakeven price' at expiration is at $74.07 ($75.00 - $.93), which is 4.9% below the current market price of $77.90.
The 'crossover price' at expiration is $78.83 ($77.90 + $.93).  This is the price above which it would have been more profitable to simply buy-and-hold APC until Jan 16th (the Jan2015 options expiration date) rather than purchasing these short Put options.

Established New Short 100% Cash-Secured Puts Position in General Electric Company

Yesterday, the Covered Calls Advisor established a new position in the General Electric Company (ticker symbol GE) by selling 4 Jan2015 $24.00 Put options.  As detailed below, this investment will yield a +1.3% absolute return in 12 days (which is equivalent to a +39.3% annualized return-on-investment) if GE closes above the $24.00 strike price on the Jan 16th options expiration date.  The transaction and a potential return-on-investment result is:

1.  General Electric Company (GE) -- New Position
The transaction was as follows:
01/06/2015 Sold 4 General Electric Co Jan2015 $24.00 Puts @ $.34
Note: The price of GE was $24.00 when this transaction was executed.

The Covered Calls Advisor does not use margin, so the detailed information on this position and some potential results shown below reflect the fact that this position was established using 100% cash securitization for the four Put options sold.

A possible overall performance result (including commissions) for this transaction would be as follows:
100% Cash-Secured Cost Basis: $9,600.00
= $24.00*400
Note:  the price of GE was $24.00 when these Put options were sold.

Net Profit:
(a) Options Income: +$124.05
= ($.34*400 shares) - $11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If GE is above $24.00 strike price at Jan2015 expiration): +$0.00
= ($24.00-$24.00)*400 shares

Total Net Profit (If GE is above $24.00 strike price at Jan2015 options expiration): +$124.05
= (+$124.05 +$0.00 +$0.00)

Absolute Return (If GE is above $24.00 strike price at Jan2015 options expiration): +1.3%
= +$124.05/$9,600.00
Annualized Return (If GE is above $24.00 at expiration): +39.3%
= (+$124.05/$9,600.00)*(365/12 days)

The downside 'breakeven price' at expiration is at $23.66 ($24.00 - $.34), which is 1.3% below the current market price of $24.00.
The 'crossover price' at expiration is $24.34 ($24.00 + $.34).  This is the price above which it would have been more profitable to simply buy-and-hold GE until Jan 16th (the Jan2015 options expiration date) rather than purchasing these short Put options.

Established New Short 100% Cash-Secured Puts Position in Apple Inc.

Today, the Covered Calls Advisor established a new position in Apple Inc. (Symbol AAPL) by selling 2 Jan9th2015 $105.00 Put options. This is a Weekly position and reflects that the Covered Calls Advisor would be very willing to purchase Apple Inc. shares at $105.00 (for future covered calls investments) upon the close of business this Friday if the stock continues to decline to below the $105.00 strike price.  If the stock remains above $105 by the market close this Friday, then the $213.55 profit (a 1.0% absolute return-on-investment result in only 5 days) as detailed below will have been achieved.  This transaction and the potential return-on-investment result is:

1.  Apple Inc. (AAPL) -- New Position
The transaction was as follows:
01/05/2015 Sold 2 Apple Inc. Jan 9, 2015 $105.00 Puts @ $1.12
Note: The price of AAPL was $106.53 when this transaction was executed.

The Covered Calls Advisor does not use margin, so the detailed information on this position and some potential results shown below reflect the fact that this position was established using 100% cash securitization for the two Put options sold.

A possible overall performance result (including commissions) for this transaction would be as follows:
100% Cash-Secured Cost Basis: $21,000.00
= $105.00*200
Note:  the price of AAPL was $106.53 when these Put options were sold.

Net Profit:
(a) Options Income: +$213.55
= ($1.12*200 shares) - $10.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If AAPL is above $105.00 strike price at Jan 9th, 2015 expiration): +$0.00
= ($105.00-$105.00)*200 shares

Total Net Profit (If AAPL is above $105.00 strike price upon this Friday's options expiration): +$213.55
= (+$213.55 +$0.00 +$0.00)

Absolute Return (If AAPL is above $105.00 strike price at Jan 9th, 2015 options expiration): +1.0%
= +$213.55/$21,000.00

Continuation of Covered Calls Position in Agnico Eagle Mines Ltd.

Today, the covered calls position in Agnico Eagle Mines Ltd. (ticker symbol AEM) was continued by selling three Jan2015 $27.50 strike price Call options.  The transactions to date for this AEM position and two possible resulting return-on-investment results are as follows:

1.  Agnico Eagle Mines Ltd. (AEM) -- Continuation
The transactions are as follows:
09/24/2014 Sold 3 Oct2014 $30.00 Puts @ $1.10
Note: The price of Agnico Eagle was $30.03 when this transaction was executed.
10/17/2014 3 Oct2014 $30.00 Puts expired
Note: the price of AEM was $28.72 when these Puts expired
10/20/2014 Sold 3 Nov2014 $30.00 Calls @ $1.75
Note: the price of AEM was $29.55 when these options were sold.
11/21/2014 3 Nov2014 Call options expired
Note: the price of AEM was $26.64 today upon Nov2014 options expiration
12/09/2014 Sold 3 AEM Dec2014 $27.50 Call options @ $.35
Note: the price of AEM was $25.52 when these 3 Call options were sold.
12/20/2014 3 Dec2014 $27.50 Call options expired
01/05/2015 Sold 3 AEM Jan2015 $27.50 Call options @ $1.03
Note: the price of AEM was $27.25 when these Call options were sold.

Two possible overall performance results (including commissions) for this Agnico Eagle Mines transaction would be as follows:
100% Cash-Secured Cost Basis: $9,000.00 = $30.00*300
Note: the price of AEM was $30.03 when these Put options were sold.

Net Profit:
(a) Options Income: +$1,224.20
= ($1.10+$1.75+$.35+$1.03)*300 shares - 4*$11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If AEM close at current market price of $27.25 at Jan2015): -$825.00
= ($27.25-$30.00)*300 shares; OR
(c) Capital Appreciation (If AEM close above $27.50 at Jan2015 expiration): -$750.00
= ($27.50-$30.00)*300 shares

1.  Total Net Profit (If AEM closes at current market price of $27.25 at Jan2015 options expiration): +$399.20 
= (+$1,224.20 +$0.00 -$825.00); OR
2. Total Net Profit (If AEM is above $27.50 strike price at Jan2015 options expiration): +$474.20 
= (+$1,224.20 +$0.00 -$750.00)

1. Absolute Return (If AEM is at $27.25 current market price at Jan2015 options expiration and Call options thus expire worthless):  +4.4%
= +$399.20/$9,000.00
Annualized Return (If AEM is unchanged at $27.25 at Jan2015 expiration): +14.1%
= (+$399.20/$9,000.00)*(365/115 days); OR
2. Absolute Return (If AEM is above $27.50 strike price at Jan2015 options expiration and Call options are assigned): +5.3%
= +$474.20/$9,000.00
Annualized Return (If AEM is above $27.50 at Jan2015 expiration): +16.7%
= (+$474.20/$9,000.00)*(365/115 days)