Returns -- Through February 2009

The Covered Calls Advisor Portfolio (CCAP) has substantially outperformed the Russell 3000 benchmark so far in 2009. Selling call options against our stock holdings provides us covered calls investors with a clear relative advantage over the typical buy-and-hold investor; this is especially true during bearish markets (such as we are currently experiencing) as well as during range-bound markets.

Below is the Covered Calls Advisor Portfolio results for January and February 2009 year-to-date. First, a single performance measure is used to determine overall portfolio investment performance results -- it is called 'Total Account Value Return Percent'. A simple example demonstrates how it is calculated:
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.

1. February 2009 Year-to-Date Results:

CCAP Absolute Return (Jan 1st through Feb 28th, 2009) = -7.35%
($185,052.71-$199,733.10)/$199,733.10

Benchmark Russell 3000(IWV) Absolute Return(Jan 1st through Feb 28th,2009) = -17.98%
($42.65-$52.00)/$52.00

Although negative, the CCAP has performed substantially better than the Russell 3000 benchmark thus far in 2009.

2. Prior Years Results:

The Covered Calls Advisor Portfolio (CCAP) was begun in September, 2007. The annualized returns achieved for 2007 and 2008 compared with the Russell 3000 benchmark results were as follows:







For establishing new covered calls positions at this time, the Covered Calls Advisor's Overall Market Meter (shown in the right sidebar near the top of this page) shows that a SLIGHTLY BULLISH investment posture is recommended.
The corresponding covered calls investing approach is to write near-month primarily slightly out-of-the-money covered calls. By 'slightly out-of-the-money', this advisor means that for a covered calls portfolio, on average covered calls positions should be established somewhere between 1.0% and 2.5% below the strike price.

Home Depot Inc -- Continuation Transaction

The following transaction was made to establish a covered calls position against the 300 shares owned in Home Depot Inc (HD):
02/26/09 Sell-to-Open (STO) 3 HD Apr09 $22.50s @ $.65
Normally, the near-month (Mar09) option would be sold, but the premium on the Mar09 was less than the minimum threshold of the Covered Calls Advisor of $.40, so the Apr09 expiration was selected.

The transactions history to date is as follows:
01/27/09 Bought 300 HD @ $21.95
01/27/09 Sold 3 HD Feb09 $22.50 Calls @ $.89
02/21/09 Feb09 Options Expired
02/26/09 Sell-to-Open (STO) 3 HD Apr09 $22.50s @ $.65
Note: The price of HD stock was $20.69 today when the calls were sold.
03/10/09 $67.50 Ex-dividend ($.225*300 shares)

The overall performance results(including commissions) for the HD transactions are as follows:
Stock Purchase Cost: $6,593.95
($21.95*300+$8.95 commission)

Net Profit:
(a) Options Income: +$439.60 (300*($.89+$.65) - 2*$11.20 commissions)
(b) Dividend Income: +$67.50
(c) Capital Appreciation (If stock price unchanged): -$386.95
= ($20.69-$21.95)*300 - $8.95 commissions
(d) Capital Appreciation (If exercised): +$156.05
= ($22.50-$21.95)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $20.69): +$120.15
= (+$439.60 +$67.50 -$386.95)
Total Net Profit(If stock price exercised at $22.50): +$663.15
= (+$439.60 +$67.50 +$156.05)

Absolute Return if Unchanged: +1.8%
=+$120.15/$6,593.95
Annualized Return If Unchanged (ARIU): +12.5%
=(+$120.15/$6,593.95)*(365/53 days)

Absolute Return if Exercised: +10.1%
=+$663.15/$6,593.95
Annualized Return If Exercised (ARIE) +69.3%
=(+$663.15/$6,593.95)*(365/53 days)

Bank of America Corp -- Continuation Transaction

The following transaction was made to establish a covered calls position against the 500 shares owned in Bank of America Corp (BAC):
02/26/09 Sell-to-Open (STO) 5 BAC Mar09 $6s @ $.70

The transactions history to date is as follows:
01/15/09 Bought 500 BAC @ $7.929
01/15/09 Sold 5 BAC Feb09 $7.50 Calls @ $2.08
02/21/09 Feb09 Options Expired
02/26/09 Sell-to-Open (STO) 5 BAC Mar09 $6s @ $.70
Note: The price of BAC stock was $5.68 today when the calls were sold.

The overall performance results(including commissions) for the BAC transactions are as follows:
Stock Purchase Cost: $3,973.45
($7.929*500+$8.95 commission)

Net Profit:
(a) Options Income: +$1,364.60 (500*($2.08+$.70) - 2*$12.70 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged): -$1,133.45
= ($5.68-$7.929)*500 - $8.95 commissions
(d) Capital Appreciation (If exercised): -$973.45
= ($6.00-$7.929)*500 - $8.95 commissions

Total Net Profit(If stock price unchanged at $5.68): +$231.15
= (+$1,364.60 +$0.00 -$1,133.45)
Total Net Profit(If stock price exercised at $6.00): +$391.15
= (+$1,364.60 +$0.00 -$973.45)

Absolute Return if Unchanged: +5.8%
=+$231.15/$3,973.45
Annualized Return If Unchanged (ARIU): +32.7%
=(+$231.15/$3,973.45)*(365/65 days)

Absolute Return if Exercised: +9.8%
=+$391.15/$3,973.45
Annualized Return If Exercised (ARIE) +55.3%
=(+$391.15/$3,973.45)*(365/65 days)

j2 Global Communications Inc -- Continuation Transaction

The following transaction was made to establish a covered calls position against the 300 shares owned in j2 Global Communications Inc (JCOM):
02/25/09 Sell-to-Open (STO) 3 JCOM Mar09 $20s @ $.75

The transactions history to date is as follows:
01/23/09 Initial Stock Purchase Transaction -- Bought 300 JCOM @ $16.76
01/23/09 Inital Calls Sold Transaction -- Sold 3 JCOM Feb09 $17.50 Calls @ $1.00
Roll-Up Spread Transaction:
02/03/09 Buy-to-Close (BTC) 3 JCOM Feb09 $17.5s @ $2.76
02/03/09 Sell-to-Open (STO) 3 JCOM Feb09 $20s @ $1.06
Note: The price of JCOM was $19.90 today when this transaction was executed.
02/21/09 Feb09 Options Expired
02/25/09 Sell-to-Open (STO) 3 JCOM Mar09 $20s @ $.75
Note: JCOM stock was priced at $19.37 today when the calls were sold.

The overall performance results(including commissions) for the JCOM transactions through the Mar09 expiration would be as follows:

Stock Purchase Cost: $5,036.95
($16.76*300+$8.95 commission)

Net Profit:
(a) Options Income: -$18.60 (300*($1.00-$2.76+$1.06+$.75) - 3*$11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If unchanged): +$774.05 = ($19.37-$16.76)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised): +$963.05 = ($20.00-$16.76)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $19.37): +$755.45
= (-$18.60 +$0.00 +$774.05)
Total Net Profit(If stock price exercised at $20.00): +$944.45
= (-$18.60 +$0.00 +$963.05)

Absolute Return (If Stock Price Unchanged at $19.37) = +15.0%+$755.45/$5,036.95
Annualized Return If Unchanged (ARIU) +96.0%
(+$755.45/$5,036.95)*(365/57 days)

Absolute Return If Exercised = +18.8%
+$944.45/$5,036.95
Annualized Return If Exercised (ARIE) +120.1%
(+$944.45/$5,036.95)*(365/57 days)