Initial Transaction - Omnicare (OCR)

An additional position I opened at the end of September was in a company which I had in the CCIP back in April, and had exited in July. Omnicare is a is a geriatric pharmaceutical services company. The Company operates in two segments: Pharmacy Services and Contract Research Organization Services (CRO Services). The Company provides pharmaceuticals and related ancillary pharmacy services to long-term healthcare institutions. The uncertainty over the health care legislation in Congress as well as difficulty in executing its turnaround plan has caused the company to drop near its 52-week low of around $19. As I believe that regardless of the legislation passed it will bring the company a greater number of beds to be serviced, I thought now was a good time to get back in. However, I wanted to be somewhat cautious so I established an ITM call. The new profit/loss info is below:

9/29/2009 -- Bought 100 OCR @ 22.93
9/29/2009 -- Sold To Open 1 OCR November $22.50 Call @ 1.59


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $2134.00

If stock is called at expiration:

Downside Coverage: 6.9%
Possible Max Upside: 5.44%

Annualized Max Upside: 37.44%

Initial Transaction - Jack In The Box (JACK)

At the end of September, I decided to open a new cash-secured put position in Jack In The Box, a California based fast food chain. The company owns both the Jack In The Box burger chain as well as the Mexican fast food restaurant, Qdoba. I decided to open this trade after considering it for about 3 months. Although I have never been to a Jack In The Box, I was introduced to the Qdoba chain in college. This restaurant is similar to another Mexican fast food chain which more people are familiar with, Chipotle. Jack In The Box is different from other fast food chains, in that it changes its menu quite often, in an effort to find menu items that have greater appeal. I chose to invest in the company at this point in time mostly for technical reasons, as it is currently floating above a key point of support at $20. The stock has not closed below this point since the market crashed in March. As such I don't foresee too much downside risk. The new profit/loss info is below:

9/29/2009 -- Sold To Open 1 JACK November $20 Put @ 0.95

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: N/A

Possible Max Upside: 4.75%

Annualized Max Upside: 32.71%

Initial Transaction - SIMS Metal Management (SMS)

This was my first new position after returning from vacation. SIMS metal management is the world's largest metals recycling company and is based on Australia. I chose to open this position in order to further diversify my portfolio with a construction type play, as well as adding some more "international flavor." The options premiums are pretty high for this particular stock, but they are also not very liquid, so it is best to establish a cc by setting a net debit order instead of buying them separately. The profit/loss info is below:

9/28/2009 -- Bought 100 SMS @ 19.69
9/28/2009 -- Sold To Open 1 SMS October $20 Call @ 0.7

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: $1899.00

Downside Protection: 3.5%

Potential Gain If Called At Expiration: 5.06%

Potential Annualized Gain If Called At Expiration: 97.11%

Update Transaction - McGraw-Hill (MHP)

McGraw-Hill was another position which was rolled out to another month's expiration. The stock has been on quite a rollercoaster ride since I purchased it. It rose as high as $33, and was promptly demolished after a pending court case was not dismissed regarding its ratings business. As the stock had made a brief rebound, I decided to roll-out the call until November. The new profit/loss info is below:

8/21/2009 -- Bought 100 MHP @ 29.66
8/21/2009 -- Sold To Open 1 MHP September $30 Call @ 0.86
8/24/2009 -- Dividend @ 0.23
9/3/2009 -- Bought To Open 1 MHP September $25 Put @ 0.20
9/18/2009 - Bought To Close 1 MHP September $30 Call @ 0.08
9/18/2009 -- Sold To Open 1 MHP November $30 Call @ 1.12

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: 2890.00

Potential Gain If Called At Expiration: 7.51%
PotentialAnnualized Gain If Called At Expiration: 29.79%

Closing Transaction - Lockheed Martin (LMT)

As I have mentioned in my recent posts, as I was going to be on vacation the week following options expiration in September, I closed or rolled-out many of my positions the previous week. Lockheed Martin was one of the positions which I closed, after it jumped about 5% at the end of expiration week. I had originally opened the position in Lockheed to capitalize on the dividend, but also because it was a solid company. I would not hesitate to re-open the position of LMT fell back below $75 and I had funds available. The final profit/loss info is below:

8/25/2009 -- Bought 100 LMT @ 74.30
8/25/2009 -- Sold To Open 1 LMT September $75 Call @ 1.30
8/28/2009 -- Dividend @ 0.57
9/17/2009 -- Bought To Close 1 LMT September $75 Call @ 3.40
9/17/2009 -- Sold 100 LMT @ 78.32

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: 7300.00

Final Gain: 3.41%
Annualized Gain: 54.13%

Update Transaction - AT&T (T)

Continuing the trend of rolling positions over to October expirations, I did so on AT&T as it was going to be paying a dividend in October. The new profit/loss info is below:

Transaction History:
Various -- Bought 100 T @ 25.125
2/25/2009 -- Sold To Open 1 T March $24 Call @ 0.895
3/6/2009 -- Bought To Close 1 T March $24 Call @ 0.3874
4/7/2009 -- Dividend @ 0.41
4/16/2009 -- Sold To Open 1 T May $26 Call @ 0.8126
5/15/2009 -- Call Expired
7/8/2009 -- Dividend @ 0.41
7/23/2009 -- Sold To Open 1 T August $26 Call @ 0.4
8/21/2009 -- Call Expired OTM
8/24/2009 -- Sold To Open 1 T September $26 Call @ 0.53
9/17/2009 -- Bought To Close 1 T September $26 Call @ 0.34
9/17/2009 -- Sold To Open 1 T October $26 Call @ 0.64


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $2512.50
Current Cost Average: $21.75


Downside Coverage (based on current share price, 26.30): 17.3%

Possible Max Upside (if called at ex-div): 17.52%
Annualized Max Upside (if called at ex-div): 28.42%

Possible Max Upside (if called at expiration): 19.21%
Annualized Max Upside (if called a expiration): 29.97%

Update Transaction - The Buckle (BKE)

As expiration day was coming to a close I decided to roll forward my position in The Buckle, a premium denim retailer. The stock has made quite the rebound since falling to $26 after a lackluster same-store sales report in July. With the stock approaching $30, I decided to roll forward the September $30 call to October in case of a precipitous decline in the market during the following week while I would be away. Additionally, The Buckle normally pays a dividend in October, and so holding onto the stock for another month would yield additional profit. The new profit/loss info is below:

8/7/2009 -- Bought 100 BKE @ 26.70
8/7/2009 -- Sold To Open 1 BKE $30 September Call @ 0.70
9/17/2009 -- Bought To Close 1 BKE $30 September Call @ 0.15
9/17/2009 -- Sold To Open 1 BKE $30 October Call @ 0.85

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $2635.00

Downside Coverage (Current Price of 29.23): 13.95%
Possible Max Upside: 16.32%

Annualized Max Upside: 83.89%

Update Transaction - SPY Call

Continuing with my new strategy which was described in my previous post on the SPY call. I decided to roll it over to an October call. For this call to become appreciating the SPY would have to rise 3% from its current levels (from 107 -> 110). The purchase info is below:

8/24/2009 -- Bought 1 $106 SPY September Call @ 1.35
9/16/2009 -- Sold 1 $106 SPY September Call @ 0.58
9/16/2009 -- Bought 1 $110 SPY October Call @ 0.82

Update Transaction - Best Buy (BBY)

It would seem that I always have to be traveling the week before or the week after expiration. This has thus far presented a difficult decision on how to deal with positions that are in-the-money when nearing expiration as the decision has to be made to roll them up and out, or close the position early in order to open a new one. For Best Buy, the decision was made after earnings were announced causing the stock price to drop about 7% from a high of 41 pre-earnings announcement to around 39. With an upcoming dividend, relatively good option premiums, and my continued belief in future earnings potential, I decided to roll the position out at the same strike for the next month, while also purchasing a protective put to guard against a continued drop in the stock as well as a general drop in the market. The new profit/loss info is below:

6/12/2009 -- Bought 100 BBY @ 37.54
6/12/2009 -- Sold To Open 1 BBY July $39 Call @ 1.54
6/12/2009 -- Bought To Open 1 BBY June $35 Put @ 0.6
6/18/2009 -- Bought To Close 1 BBY July $39 Call @ 0.50
6/18/2009 -- Sold To Close 1 BBY June $35 Put @ 1.1
6/23/2009 -- Sold To Open 1 BBY July $38 Call @ 0.20
7/2/2009 -- Dividend @ 0.14
7/18/2009 -- Call Expired
7/20/2009 -- Sold To Open 1 BBY August $38 Call @ 0.65
8/12/2009 -- Bought To Close 1 BBY August $38 Call @ 0.6
8/12/2009 -- Sold To Open 1 BBY September $39 Call @ 1.20
9/15/2009 -- Bought To Close 1 BBY September $39 Call @ 1.52
9/15/2009 -- Sold To Open 1 BBY October $39 Call @ 2.39
9/15/2009 -- Bought To Open 1 BBY October $32 Put @ 0.35

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $3660.00

Possible Max Upside: 14.19%

Annualized Max Upside: 40.8%

Update Transaction - Direxion 3x Small Cap Bear (TZA)

For the first time in the CCIP, I will be using an option strategy referred to as a put spread. This is essentially the same concept as a covered call in which you also buy a protective put, however it removes one of the legs of the trade. Instead, you sell a higher strike put, and buy a lower strike put. The perfect outcome is that both puts expire out-of-the-money and you collect the difference in the two premiums. For this particular position, I decided to create a put spread with TZA, which returns 3x the inverse of the daily return of the Russell 2000 index. The idea here is essentially that I believe the market cannot sustain this drive higher forever, and that its due time for a pullback. As such I would like to be hedged against such a pullback, and I think this is a perfect way to do so. It results in a potential profit of 6.8%, and the maximum loss is only 15%. I will most likely be using more of these type strategies with the more volatile positions in my portfolio. The profit/loss info is below:

9/14/2009 -- Sold To Open 1 $12.50 Strike Oct Put @ $1.10
9/14/2009 -- Bought To Open 1 $10 Strike Oct Put @ $.25

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: N/A

Possible Max Upside: 6.8%

Annualized Max Upside: 75.21%

Update Transaction - Marathon Oil (MRO)

As I was going to be on vacation the week after option expiration, I began to roll out positions in my portfolio to October so as to reduce the amount of cash sitting useless the week after expiration. This was the first position to be rolled out as part of this plan. Marathon Oil has stayed in a relatively tight range between 31 and 34 for the past month and a half and I expect it to stay in this range in the near future, as oil oscillates between 65 and 75. Rolling this CSP forward to October does not change the annualized return. The new profit/loss info is below:

8/24/2009 -- Sold To Open 1 MRO September $31 Put @ 0.70
9/14/2009 -- Bought To Close 1 MRO September $31 Put @ 0.33
9/14/2009 -- Sold To Open 1 MRO September $31 Put @ 1.03

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: N/A

Possible Max Upside: 4.52%

Annualized Max Upside: 30.53%

Update Transaction - United States Natural Gas (UNG)

After a large increase in the share price of UNG in the beginning of September, I decided I had slightly over reacted by selling a $12 call for January, and decided to roll my January CC up to a $13 strike increasing my potential profit from near zero to a respectable number. The performance metrics are below:

7/23/2009 -- Bought 100 UNG @ 13.14
7/23/2009 -- Sold To Open 1 UNG July $13 Call @ 0.88
8/22/2009 -- Call Expired
8/30/2009 -- Sold To Open 1 UNG October $14 @ 0.25
9/2/2009 -- Bought To Close 1 UNG October $14 @ 0.18
9/2/2009 -- Sold To Open 1 UNG January $12 @ 0.68
9/10/2009 - Bought To Close 1 UNG January $12 @ 0.9
9/10/2009 -- Sold To Open 1 UNG January $13 @ 1.29

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1353.00

Downside Coverage: None

Possible Max Upside: 5.49%

Annualized Max Upside: 11.25%

Update Transaction - United States Natural Gas (UNG)

As I noted in my previous post regarding UNG, it would seem that the bottom has fallen out of natural gas recently. As such, I have decided to focus on simply recouping my losses rather than looking to make a hefty profit. As such I sold a $12 January call which is below my original purchase price. The performance metrics are below:

7/23/2009 -- Bought 100 UNG @ 13.14
7/23/2009 -- Sold To Open 1 UNG July $13 Call @ 0.88
8/22/2009 -- Call Expired
8/30/2009 -- Sold To Open 1 UNG October $14 @ 0.25
9/2/2009 -- Bought To Close 1 UNG October $14 @ 0.18
9/2/2009 -- Sold To Open 1 UNG January $12 @ 0.68

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1353.00

Downside Coverage: None

Possible Max Upside: 0.10%

Annualized Max Upside: 0.21%

Update Transaction - United States Natural Gas (UNG)

The price of natural gas has continued to fall, and UNG has been a massive drag on the CCIP. I dont think anyone expected natural gas prices to continue falling, and the current regulatory issues facing UNG itself are not making things easier. As a result I had purchased a protective put against one of my UNG positions on 8/28/2009, and then sold it on 9/2/2009 after continued downward movement by UNG, as I result I have lowered my overall cost basis. I also sold a January call, as I dont foresee UNG rising very substantially in the near future as it still trades at a premium to its NAV. The new profit/loss info is below:

6/10/2009 -- Bought 100 UNG @ 14.50
6/10/2009 -- Sold To Open 1 UNG July $15 Call @ 0.97
7/6/2009 -- Bought To Close 1 UNG July $15 Call @ 0.15
7/17/2009 -- Sold To Open 1 UNG August $15 Call @ 0.45
8/22/2009 -- Call Expired
8/28/2009 -- Bought To Open 1 UNG October $10 Put @ 0.65
9/1/2009 -- Sold To Open 1 UNG January '10 Call @ 0.50
9/2/2009 -- Sold To Close 1 UNG October $10 Put @ 0.95


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1353.00


Downside Coverage (from current price): None
Possible Max Upside: 11.6%

Annualized Max Upside: 19.34%