November 2009 Expiration Transactions

The Covered Calls Advisor Portfolio (CCAP) contained a total of seventeen positions with November 2009 expirations, with the following results:
- Four positions (INTC, FXI, EWY, and AMTD) closed in-the-money. The calls were exercised and the stock was called away. The annualized percent return-on-investment(ROI) results for the four exercised positions were:

Intel Corporation (INTC): +21.3%
iShares MSCI China ETF (FXI): +43.2%
iShares MSCI South Korea ETF (EWY): +44.8%
TD Ameritrade Holding (AMTD): +52.3%

- Thirteen positions in the CCAP (ACN, AMGN, AHL, CHU, EME, FLR, FUQI, ITT, MFLX, NE, QDEL, SOHU, and UNH) ended out-of-the-money. Decisions will be made to either sell the equities, or to keep them and sell calls to establish Dec09 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 positions that were assigned (called away) upon Nov09 expiration are as follows:

1. Intel Corporation (INTC) -- Closed
The transactions history was as follows:
10/27/09 Bought 700 INTC @ $19.70
10/27/09 Sold 7 INTC Nov09 $19.00 Calls @ $.88
11/04/09 $98.00 ($.14 * 700 shares) Ex-dividend
11/21/09 Nov09 Options Exercised (700 shares of INTC called away at $19.00)
Note: Closing price of INTC was $19.24 on expiration Friday.

The overall performance results(including commissions) for the INTC transactions are as follows:
Stock Purchase Cost: $13,798.95
($19.70*700+$8.95 commission)

Net Profit:
(a) Options Income: +$601.80 (700*$.88 - $14.20 commissions)
(b) Dividend Income: +$98.00 ($.14 * 700 shares)
(c) Capital Appreciation: -$498.95
= ($19.70-$19.00)*700 - $8.95 commissions

Total Net Profit: +$200.85
= (+$601.80 +$98.00 -$498.95)

Absolute Return: +1.5%
= +$200.85/$13,798.95

Annualized Return: +21.3%
= (+$200.85/$13,798.95)*(365/25 days)


2. iShares MSCI China ETF (FXI) -- Closed
The transactions history was as follows:
10/16/09 Bought 500 FXI @ $43.29
10/16/09 Sold 5 FXI Nov09 $44.00 Calls @ $1.40
10/22/09 Bought 500 FXI @ $43.73
10/22/09 Sold 5 FXI Nov09 $44.00 Calls @ $1.40
11/21/09 Nov09 Options Exercised (1000 shares of FXI called away at $44.00)
Note: Closing price of FXI was $44.60 on expiration Friday.

The overall performance results(including commissions) for the FXI transactions are as follows:
Stock Purchase Cost: $43,527.90
($43.29*500+$43.73*500+$8.95*2 commissions)

Net Profit:
(a) Options Income: +$1,374.60
= [1000*$1.40) - $25.40 commissions]
(b) Dividend Income: +$0.00
(c) Capital Appreciation: +$481.05
= [$44.00-($43.29+$43.73)/2)*1000 - $8.95 commissions

Total Net Profit: +$1,855.65
= (+$1,374.60 +$0.00 +$481.05)

Absolute Return: +4.3%
= +$1,855.65/$43,527.90
Annualized Return: +43.2%
= (+$1,855.65/$43,527.90)*(365/36 days)


3. iShares MSCI South Korea ETF (EWY) -- Closed
The transactions history was as follows:
10/16/09 Bought 400 EWY @ $45.82
10/16/09 Sold 4 EWY Nov09 $46.00 Calls @ $1.90
11/21/09 Nov09 Options Exercised (400 shares of EWY called away at $46.00)
Note: Closing price of EWY was $46.08 on expiration Friday.

The overall performance results(including commissions) for the FXI transactions are as follows:
Stock Purchase Cost: $18,336.95
($45.82*400 +$8.95 commissions)

Net Profit:
(a) Options Income: +$748.05
= [400*$1.90) - $11.95 commissions]
(b) Dividend Income: +$0.00
(c) Capital Appreciation: +$63.05
= ($46.00-$45.82)*400 - $8.95 commissions

Total Net Profit: +$811.10
= (+$748.05 +$0.00 +$63.05)

Absolute Return: +4.4%
= +$811.10/$18,336.95
Annualized Return: +44.8%
= (+$811.10/$18,336.95)*(365/36 days)


4. TD Ameritrade Holding (AMTD) -- Closed
The transactions history was as follows:
10/22/09 Bought 400 AMTD @ $19.70
10/22/09 Sold 4 AMTD Nov09 $20.00 Calls @ $.60
11/21/09 Nov09 Options Exercised (400 shares of AMTD called away at $20.00)
Note: Closing price of AMTD was $20.91 on expiration Friday.

The overall performance results(including commissions) for the AMTD transactions are as follows:
Stock Purchase Cost: $7,888.95
= ($19.70*400+$8.95 commission)

Net Profit:
(a) Options Income: +$228.05
= (400*$.60 - $11.95 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation with Stock Exercised at $20.00: +$111.05
= ($20.00-$19.70)*400 - $8.95 commissions

Total Net Profit: +$339.10
= (+$228.05 +$0.00 +$111.05)

Absolute Return with Stock Exercised at $20.00: +4.3%
= +$339.10/$7,888.95
Annualized Return: +52.3%
= (+$339.10/$7,888.95)*(365/30 days)

Establish iShares MSCI China ETF Covered Calls

A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of the iShares MSCI China ETF (FXI) covered calls as follows:


Established iShares MSCI China ETF (FXI) Covered Calls for Dec09:
11/18/09 Bought 600 FXI @ $45.54
11/18/09 Sold 6 FXI Dec09 $46.00 Calls @ $1.44

Some possible overall performance results(including commissions) for this FXI investment would be as follows:
Stock Purchase Cost: $27,332.95
= ($45.54*600+$8.95 commission)

Net Profit:
(a) Options Income: +$850.55
= (600*$1.44 - $13.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation(If stock price unchanged at $45.54): -$8.95
= ($45.54-$45.54)*600 - $8.95 commissions
(c) Capital Appreciation (If stock exercised at $46.00): +$267.05
= ($46.00-$45.54)*600 - $8.95 commissions

Total Net Profit(If stock price unchanged at $45.54): +$841.60
= (+$850.55 +$0.00 -$8.95)
Total Net Profit(If stock exercised at $46.00): +$1,117.60
= (+$850.55 +$0.00 +$267.05)

Absolute Return if Stock Price Unchanged at $45.54: +3.1%
= +$841.60/$27,332.95
Annualized Return If Unchanged (ARIU): +36.3%
= (+$841.60/$27,332.95)*(365/31 days)

Absolute Return if Stock Exercised at $46.00: +4.1%
= +$1,117.60/$27,332.95
Annualized Return If Exercised (ARIE): +48.1%
= (+$1,117.60/$27,332.95)*(365/31 days)

The downside breakeven price for this out-of-the-money position is $44.10 ($45.54-$1.44), and as such provides a downside profit protection of up to 3.1% below the purchase price.

Establish United States Natural Gas Fund Covered Calls

A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of the United States Natural Gas Fund (UNG) covered calls as follows:

Established the United States Natural Gas Fund (UNG) Covered Calls for Dec09:
11/18/09 Bought 300 UNG @ $8.96
11/18/09 Sold 3 UNG Dec09 $9.00 Calls @ $.51

UNG invests in near-month futures contracts and tracks the price of natural gas. The Covered Calls advisor believes that natural gas is a cost effective, clean, and abundant alternative fuel and will be an increasingly important resource in fulfilling future U.S. energy needs. At its current price near $4.30, this advisor further believes that Nat Gas now trades at the lower end of its likely price range for the next several months, and that now is a good time to initiate a covered calls position in this investment.

Some possible overall performance results(including commissions) for the UNG transactions would be as follows:
Stock Purchase Cost: $2,696.95
= ($8.96*300+$8.95 commission)

Net Profit:
(a) Options Income: +$141.80
= (300*$.51 - $11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $8.96):
-$8.95 = ($8.96-$8.96)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised at $9.00): +$3.05
= ($9.00-$8.96)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $8.96): +$132.85
= (+$141.80 +$0.00 -$8.95)
Total Net Profit(If stock price exercised at $9.00): +$144.85
= (+$141.80 +$0.00 +$3.05)

Absolute Return if Unchanged at $8.96: +4.9%
= +$132.85/$2,696.95
Annualized Return If Unchanged (ARIU) +58.0%
= (+$132.85/$2,696.95)*(365/31 days)

Absolute Return if Exercised at $46.00: +5.4%
= +$144.85/$2,696.95
Annualized Return If Exercised (ARIE) +63.2%
= (+$144.85/$2,696.95)*(365/31 days)

The downside breakeven price for this out-of-the-money position is $8.45 ($8.96-$.51), and as such provides a downside profit protection of up to 4.9% below the purchase price.

Establish iShares MSCI South Korea ETF Covered Calls

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 Dec09:
11/17/09 Bought 400 EWY @ $45.59
11/17/09 Sold 4 EWY Dec09 $46.00 Calls @ $1.70

EWY is a good investment vehicle for capturing widespread exposure to the diversified South Korean economy and its stock market through a single equity. South Korea is a good value-oriented investment since some traditional value metrics such as P/E and P/Book are significantly less than those of the U.S., while the expectation for GDP growth with low inflation for 2010 also favors South Korea. This investment doubles EWY from 400 to 800 shares owned in the CCAP. Against these 800 shares covered calls have been established by previously selling 4 Nov09 $46 calls and today by selling 4 Dec09 $46 calls.

Some possible overall performance results(including commissions) for the EWY transactions would be as follows:
Stock Purchase Cost: $18,244.95
= ($45.59*400+$8.95 commission)

Net Profit:
(a) Options Income: +$668.05
= (400*$1.70 - $11.95 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $45.59):
-$8.95 = ($45.59-$45.59)*400 - $8.95 commissions
(c) Capital Appreciation (If exercised at $46.00): +$155.05
= ($46.00-$45.59)*400 - $8.95 commissions

Total Net Profit(If stock price unchanged at $45.59): +$659.10
= (+$668.05 +$0.00 -$8.95)
Total Net Profit(If stock price exercised at $46.00): +$823.10
= (+$668.05 +$0.00 +$155.05)

Absolute Return if Unchanged at $45.815: +3.6%
= +$659.10/$18,244.95
Annualized Return If Unchanged (ARIU) +41.2%
= (+$659.10/$18,244.95)*(365/32 days)

Absolute Return if Exercised at $46.00: +4.5%
= +$823.10/$18,244.95
Annualized Return If Exercised (ARIE) +51.5%
= (+$823.10/$18,244.95)*(365/32 days)