Monthly Returns - October 2009

The month of October was the second negative month for the CCIP. The overall market was essentially flat for the month, though the benchmark SPY ETF was down slightly. Premiums have stayed low, as the VIX has continued to stay pretty low throughout the month. As I have been implementing my new investing strategy over the past month and a half I have noticed some interesting things in the movement of the account. Although I have not been “beating” the benchmark by very much my volatility has been much lower. The average daily move in the CCIP has been 0.7% in the month of October vs. 1.18% in the SPY (the median was also better, 0.69% vs. 1.08%). As one of my goals in the CCIP is to make it a better investment vehicle for those who don’t like to see huge swings in account value, this is very promising. In terms of individual positions, I continue to try to move out of my positions in UNG, and hopefully that will happen in the next few months. At least in this case, natural gas prices can’t go to 0, so my potential loss is not unlimited.

I have also started to track other metrics recently to judge the performance of the CCIP. One of these metrics is to understand the overall “profit yield” in the portfolio. The “profit yield” normalizes the potential returns of each position on an annualized basis to determine an overall portfolio potential annualized return. My goal is to keep this number above 25%, and it currently stands at 28.65%. I will report this number with each monthly update from now on.

The 2009 Since Inception results are as follows:

1. Since Inception Results

CCIP Absolute Return (March 7 through October 31, 2009) = 56.77%

Benchmark S&P 500 (SPY) Absolute Return (March 7 through October 31, 2009) = 48.11%

The CCIP has outperformed the S&P 500 benchmark by a total of 8.66%

November 2009 Next Steps

The month of November is bound to be full of surprises, as it seems that the rally is losing steam. Lately, I have also heard a lot of talk about a head and shoulders pattern beginning to form, which could mean a large drop in the market in the near future. As a result of this uncertainty, I have started moving some of my money into more stable companies, which have strong dividends and are less dependent on an improving economy. As I noted above, my current strategy aims for a portfolio annualized return of 25%, however this is adjusted downwards from where it stood at the beginning of the month, which was 35%.

As of right now, my current strategies for the CCIP include:

• Near-month covered calls
• Long-term covered calls
• Ex-dividend Strategy
• Cash-Secured Put Strategy
• Put Spread Strategy

The strategy for establishing covered calls positions after November expiration will depend on what positions close ITM at expiration. I will establish new positions based upon my annualized return asset allocation strategy in order to hit an overall portfolio return of 25%.

As always, please post any thoughts or questions you have regarding the CCIP and the posts on the blog.

Initial Transaction - Bristol-Myers Squibb (BMY)

After my position in COP was called away on October 28, I decided to enter a similar type of return position with a November expiration. This position is in Bristol Myers Squibb, a pharmaceutical company which had a place in the CCIP from April until July this year. Since running up to above $22 in July right before expiration, the stock has been relatively flat. I believe that pharmaceuticals offer a unique investment in the healthcare space, as the effect on them from upcoming health care legislation should already be priced into the stock as that section of the bill has essentially been written for months. Additionally, the stock pays a great dividend, and has traded in a relatively tight range for much of the last year. I chose to enter a current month call position as I am considering slightly altering my current strategy to utilize high dividend stocks and slightly ITM or slightly OTM calls. The new profit/loss info is below:

10/29/2009 -- Bought 200 BMY @ 22.2025
10/29/2009 -- Sold To Open 2 BMY November $22 Call @ 0.5625


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $4328.00


Downside Coverage (from current price of $22.2025): 2.5%
Possible Max Upside: 1.52%

Annualized Max Upside: 24.17%

Closing Transaction - ConocoPhillips (COP)

This was an experiment in my covered call investment strategy which I think worked out quite well. The idea with this type of position is to choose a stable company, paying an above average dividend which has pretty good option premiums and sell a longer term call. The purpose of selling a longer term call is to provide multiple "exit points" for the owner of the call you sold. They could call your stock away at the first ex-dividend date, the second ex-dividend date, or expiration (assuming the option is ITM). From a return perspective, I aim for a 10-20% return regardless of when the stock would be called away. For ConocoPhillips this plan worked wonderfully, and the stock was called away on the first ex-dividend date it hit, providing a fantastic 19.42% annualized return over two months. The profit/loss info is below:

8/13/2009 -- Bought 100 COP @ 43.93
8/13/2009 -- Sold To Open 1 COP January $39 Call @ 6.49
10/28/2009 -- Sold 100 COP @ 38.9539

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: 3759.00

Actual Gain: 4.04%

Annualized Gain: 19.42%

Update Transaction - MEMC Electronic Materials (WFR)

I decided to do one post for essentially three transactions taking place on two days as it all has to do with the same event. On October 22, WFR released earnings after the market closed which were pretty disastrous. Now, this should not have been a surprise to most, as they had previously stated earnings would be horrible due to plant shutdowns they had during the quarter. However, the stock essentially fell off a cliff at which point I decided to buy back the $16 call I had sold, and sell a $15 November Call, to essentially break even if called at expiration. This was done when the stock was at about $14. Unfortunately, the stock continued to fall, reaching almost $12 at which point I decided to buy back the $15 call, and essentially wait for somewhat of a bounce in order to resell a call. I think the stock was punished more than it should have been, and this opinion was somewhat echoed by an upgrade the stock received simply based on the drop in price. The analyst noted that their target was $15, the stock had fallen almost 20% under that price and was thus undervalued (I consider this to be a smarter analyst than most, as most analysts wouldnt upgrade on such a price decline, even though it makes sense based on the target). I plan to resell a call once the stock gets somewhere above $13.50, hopefully sooner rather than later. The profit/loss info is below:

10/21/2009 -- Bought 100 WFR @ 15.76
10/21/2009 -- Sold To Open 1 WFR November $16 Call @ 0.81
10/23/2009 -- Bought To Close 1 WFR November $16 Call @ 0.25
10/23/2009 -- Sold To Open 1 WFR November $15 Call @ 0.40
10/27/2009 -- Bought To Close 1 WFR November $15 Call @ 0.20

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: 1495.00

Potential Gain If Called At Expiration: N/A
PotentialAnnualized Gain If Called At Expiration: N/A

Initial Transaction - Intel (INTC)

After a somewhat premature exit from my positions in Intel, I decided to open a new position as part of my ex-dividend strategy. The company will pay a dividend to shareholders on record November 6, meaning the ex-div date is November 4th. For this position I decided to sell a December call as it would result in a better return if the stock was actually called at the ex-dividend date. It addionally provided added downside protection due to the longer time value. The profit/loss info is below:

10/21/2009 -- Bought 100 INTC @ 19.795
10/21/2009 -- Sold To Open 1 INTC December $19 Call @ 1.14

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: $1755.00

Potential Annualized Gain If Called At Ex-Div. Date (11/4/2009): 40.48%

Potential Annualized Gain If Called At Expiration (11/21/2009): 15.75%

Downside Protection: 5.8%

Initial Transaction - MEMC Electronics Materials (WFR)

After a drop in the price of MEMC Electronics Materials, I decided to re-enter a position I had held a few months ago. I have been keeping track of companies which used to be part of the CCIP in order to re-enter positions if the price fell below the original position I had held, but the company still had strong fundamentals. This company is a bit different for the CCIP as it is more of a speculative position, though I think it is necessary to have such things in any portfolio. The company makes silicon wafers for the semiconductor and solar industry, and has had some issues recently with production problems. As a result of that, and the faltering economy, the company has reported negative earnings for the past few quarters. I think the company will be a good growth story coming out of the recession, and I therefore decided to re-establish a position. The profit/loss info is below:

10/21/2009 -- Bought 100 WFR @ 15.76
10/21/2009 -- Sold To Open 1 WFR November $16 Call @ .81

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: 1495.00

Potential Gain If Called At Expiration: 6.25%
PotentialAnnualized Gain If Called At Expiration: 73.59%

Initial & Closing Transaction - Lockheed Martin (LMT)

As goes the mantra of good investing, you must always invest logically and not emotionally. Unfortunately, I think this is one thing that most people find difficult to do, whether it be selling a position which has fallen precipitously and is no longer a good company, or not selling a position when you have made a lot of money but the company is now overvalued because you are being greedy. In this case it was neither, it was what I consider to be somewhere in between those two issues, and that is selling a position because it took a big hit one day, and though the fundamentals didn't change, it made me jumpy, so I sold it. This position was in Lockheed Martin, and though it only existed for one day, I felt it necessary to put it on the blog as it is a good investing lesson. I mentioned a few weeks ago after my position in LMT was called away at $75 that I would consider re-entering the stock if it fell below $72. The company released lackluster earnings for the latest quarter, and so the stock fell from near $78 down to $73 in one day. I chose to enter at this point in one of my long-term dividend covered call positions, similar to the one I had in ConocoPhillips. The idea here is to sell a fairly ITM call which is at least 3 months in the future, and shoot for about a 10-20% return regardless of whether the stock gets called away at any of the ex-dividend dates or at expiration. Unfortunately, the stock continued to fall the following day underneath $70 which it had not fallen below in quite a while, and I got spooked so I closed out the position. Of course, once I did so the stock rebounded somewhat, but I had already taken my loss. The lesson here is if the company is a good fundamental investment, you should not let a decline scare you away, you should instead consider it an opportunity to purchase more, or in this case possibly buy back the call and wait for a rebound t sell a new one. The profit/loss info is below:

10/20/2009 -- Bought 100 LMT @ 72.76
10/20/2009 -- Sold To Open 1 LMT March $70 Call @ 5.80
10/21/2009 -- Bought To Close 1 LMT March $70 Call / Sold 100 LMT @ 65.50

Loss = $135.00

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: 66.85

Initial Transaction - Microchip Technologies (MCHP)

This position is another in my ex-dividend strategy, which involves creating an ITM covered call position in a company which has an ex-dividend date prior to the expiration date of the option. Microchip Technology is a company which develops and manufactured specialized products for the semiconductor industry. The company has a profit margin of 24% which is much higher than peers, and yields a giant 5.66% which is amazing for a tech company. The company also reported earnings ahead of expectations in August, and based on recent earnings reports from other semiconductor companies, I expect MCHP to report good earnings in November. The company has not yet declared its dividend, but it should be paid in the second week of November based on historical payments. The profit/loss info is below:

10/20/2009 -- Bought 100 MCHP @ 26.14
10/20/2009 -- Sold To Open 1 MCHP November $25 Call @ 1.54

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: 2460.00

Potential Gain If Called At Ex-Div Date: 1.4%
Potential Annualized Gain If Called At Ex-Div Date: 22.22%

Potential Gain If Called At Expiration: 3.00%
PotentialAnnualized Gain If Called At Expiration: 34.27%

Initial Transaction - Applied Materials (AMAT)

This position was opened as part of my ex-dividend strategy. The idea here is to sell a call on a stock which be paying a dividend during the next few weeks in hopes that the stock will be called away the day before the ex-dividend date. The position in Applied Materials was opened as it is currently at multi-year lows. The company has unfortunately had some negative earnings as of late, but I believe the stock has alot of upside potential in the future due to its work in the semiconductor area (it profits regardless of whose chip is used), as well as the solar area which should benefit from legislation and regulation in the next few years once all of this health care debate is over. The company yields about 2%, and the ex-dividend date is on November 9. The profit/loss info is below:

10/20/2009 -- Bought 100 AMAT @ 13.39
10/20/2009 -- Sold To Open 1 AMAT November $13 Call @ 0.76

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: 1263.00

Potential Gain If Called At Ex-Div Date: 2.46%
Potential Annualized Gain If Called At Ex-Div Date: 44.92%

Potential Gain If Called At Expiration: 3.01%
PotentialAnnualized Gain If Called At Expiration: 34.32%

Update Transaction - United States Natural Gas (UNG)

While UNG was still hovering around the $12 mark I decided to sell a $12 call for November, which was below the $13 call I had in October, but at this point Im simply trying to exit UNG at a profit. The performance metrics are below:

7/2/2009 -- Sold To Open 1 UNG August $13 Put @ 1.15
8/21/2009 -- Stock Purchase @ $13
8/24/2009 -- Sold To Open 1 UNG October $13 Call @ 0.60
9/2/2009 -- Bought To Open 1 UNG October $8 Put @ .4275
10/16/2009 -- Option Expiration
10/20/2009 -- Sold To Open 1 UNG November $12 Call @ .45


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Purchase Price: $1190.00

Possible Max Upside: 6.04%

Annualized Max Upside: 15.61%

Initial Transaction - Astec Industries (ASTE)

I decided to open a position in Astec Industries, a company which manufactures equipment used in road building. I established this position due to a few key reasons, both technical and fundamental. The stock has been bouncing between $25 and $30 since the beginning of July and has reached a high of $34 this year, and a low slightly above $20 at the March low. As a result I judge a relatively low downside risk, and a much higher possibility of upside. On a fundamental basis, I believe that the company has a few things that has kept the stock price down, but should be figured out in the coming months. The most important of these is that the highway funding bill was not passed this year, and so there is quite a bit of uncertainty about when and for how much that bill will be passed. In my opinion the question is not whether a bill will be passed, but rather when. Additionally, most of the stimulus funding for road construction will be released next year and provide a boost to ASTE's revenues. Lastly, there is a possibility that a second stimulus might need to be passed in the next year which would be more likely to have infrastructure projects as this was not a large part of the original bill, which could add upside. All in all I think the company is a good pick for both the short and long term. Just as a note, the company does release earnings in the next month, which adds additional risk. The profit/loss info is below:

10/19/2009 -- Sold To Open 1 $25 ASTE November CSP @ $0.75


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

Potential Gain If Called At Expiration: 3.00%

PotentialAnnualized Gain If Called At Expiration: 33.18%

Initial Transaction - Life Partners Holdings (LPHI)

I decided to re-enter a position in LPHI, as it will be paying a dividend during this expiration month. The stock continues to trade in a pretty tight range between $17 and $18.50. The stock also sports an above average dividend yield of 5%. LPHI is essentially a type of investment fund for wealthy individuals. They purchase life insurance policies in the secondary market for wealthy individuals who continue to pay the premiums and then collect the funds when the underwritten individual passes. This is a relatively morbid business, but it is also one which I believe will perform well in the economic climate. The company has no debt, and is growing rapidly, as such I believe it will continue to be a good holding in the CCIP. I sold a put instead of writing a CC due to the wash rule, as I had previously sold LPHI for a loss. The profit/loss info is below:

10/19/2009 -- Sold To Open 1 $17.50 LPHI November CSP @ $1.10


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

Potential Gain If Called At Expiration: 6.29%

PotentialAnnualized Gain If Called At Expiration: 69.52%

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

As mentioned in my post on October 2009 expirations, the put I had sold in TZA was assigned as the current price was below the strike price. The stock managed to stay in the middle of the put spread I had put in place. I decided to sell a lower strike call on the new stock position, as I am neutral to bearish on the overall market at the moment. Since this stock is a triple-leveraged position, it is better to be safe than sorry, as a 5-10% increase in the overall market could wreak havoc on the position. The new 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
10/16/2009 -- Stock Bought @12.50
10/19/2009 -- Sold To Open 1 $11 Strike Nov Call @ 1.10

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $11.65

Possible Max Upside: 3.43%

Annualized Max Upside: 18.43%

Closing Transaction - Intel (INTC)

I closed both of my positions in Intel on October 15 somewhat by accident, as I had only intended for them to sell if I could gain all of the remaining time value in the sale. Unfortunately, the order was entered incorrectly as a net debit instead of net credit. Luckily, I only lost out on a few dollars in the mix-up. I would be happy to re-enter a position in Intel in the future if it falls back under $20 as I believe the company is solid, and has consistently beat earnings estimates the last few quarters along with having a good yield. The final profit/loss info is below:

Position #1 - October CC

8/24/2009 -- Bought 100 INTC @ 18.92
8/24/2009 -- Sold To Open 1 INTC October $18 Call @ 1.50
10/15/2009 -- Bought Call/Sold Stock @ 17.93

Final Profit: 2.63%

Final Annualized Gain: 18.84%

Position #2 - November CC

10/1/2009 -- Bought 100 INTC @ 19.11
10/1/2009 -- Sold To Open 1 INTC November $18 Call @ 1.56
10/15/2009 -- Bought Call/Sold Stock @ 17.88

Final Profit: 1.88%

Final Annualized Gain: 52.79%

Closing Transaction - SPY Call

I decided to close out my SPY call position, as expiration was only two days away, and the SPY would have to rise another 1-2% in order for the call to be in the money. As a result I decided to take the limited time premium that was left. I think that for now I wont be using this strategy anymore, as the timing of the call purchase ended up causing me to just miss out on gains in the SPY. I may use this strategy again in the future when I believe the market is poised for a large bullish move. The gain/loss 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
10/15/2009 -- Sold 1 $110 SPY October Call @ 0.55

Total Loss: $104 (Less than 0.3% of the total portfolio)

Options Expiration Day - October 2009

The Covered Calls Investor Portfolio contained a total of 6 positions with October 2009 expirations, and 8 positions either with a Non-October expiration or no current covered call. The 6 positions with October expiration had the following results:

- 4 positions (BBY, LPHI, SMS, MRO) closed in-the-money. The calls were exercised and the stock was sold. All of these positions had pretty good returns. SMS was looking as if it wasnt going to close in the money, but it had a pretty big run-up into expiration. The annualized gain/loss results (after commissions) were:

Best Buy (BBY) => 41.84% (Held Since 6/12/2009)
Life Partners Holdings (LPHI) => 61.11% (Held Since 8/31/2009)
SIMS Metal Management (SMS) => 111.05% (Held Since 9/28/2009)
Marathon Oil (MRO) => 31.10% (Held Since 8/24/2009)

- 2 positions in the portfolio (UNG, TZA) ended out-of-the-money. As is the norm with UNG, it yet again ended OTM.


United States Natural Gas (UNG) - $11.57
100 Shares with Current Cost Basis of $11.7275

This position will be kept, as I believe natural gas prices will eventually rebound. In the meantime, I will continue to sell calls against the three UNG positions which I still maintain. The risk factor in this position is mainly due to the way in which the ETF operates, as current CTFC proceedings have resulted in the company which manages UNG to have to invest in riskier instruments in order to track the price of natural gas.

Direxion 3x Small Cap Bear (TZA) - $11.17
100 Shares with Current Cost Basis of $11.65

This position is only being used as a hedge in case of a decline in the overall market. I will continue to hold this one position, and sell ITM calls against it. As it only accounts for a small percentage of my total portfolio I am not too worried about a large loss, in case of more large gains in the indices.


The positions in the portfolio which did not have October expirations include:

United States Natural Gas (UNG)(200 Shares) - January $13 and $14 Covered Calls

Intrepid Potash (IPI)(100 Shares) - November $27 Covered Call

ConocoPhillips (COP)(100 Shares) - January $39 Covered Call

McGraw-Hill (MHP)(100 Shares) - November $30 Covered Call

Jack In The Box (JACK) - November $20 CSP

Omnicare (OCR)(100 Shares) - November $22.50 Covered Call

Fluor (FLR)(100 Shares) - November $50 Covered Call

Update Transaction - Intrepid Potash (IPI)

As I expected IPI rebounded nicely from a low around $22/share. Unfortunately, there was not a lot of time until October expiration and so the premiums for strikes as high as $27 were non-existent. As such, I decided to sell a $27 Nov call. The new profit/loss info is below:

7/30/2009 -- Bought 100 IPI @ 26.70
7/30/2009 -- Sold To Open 1 IPI $27 August Call @ 1.54
7/30/2009 -- Bought To Open 1 IPI $22 August Put @ 0.45
8/21/2009 -- Call Expired
8/24/2009 -- Sold To Open 1 IPI $28 September Call @ 0.7
8/26/2009 -- Bought To Open 1 IPI $21 September Put @ 0.25
8/31/2009 -- Bought To Close 1 IPI $28 September Call @ 0.10
8/31/2009 -- Sold To Open 1 IPI $27 October Call @ 0.50
10/1/2009 -- Bought To Close 1 IPI $27 October Call @ 0.10
10/8/2009 -- Sold To Open 1 IPI $27 November Call @ 0.70


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $2561.00
Current Cost Average: $24.16

Possible Max Upside: 11.29%

Annualized Max Upside: 36.14%

Initial Transaction - Fluor (FLR)

After seeing a position opened by the Covered Call Advisor (coveredcalladvisor.blogspot.com) in Fluor, I decided to take a look at the company. When I looked at the company I found some very nice features for a covered call position. The first thing I noticed was the chart which showed FLR oscillating around $50/share for the past 4 months. The second thing that made this a good company for a covered call position was the fact that it paid a dividend. Although small, dividends can add alot to covered call positions. Thirdly, the company is poised to benefit from what I foresee as a rebound in construction of large infrastructure projects over the next few years. Specifically, the recent run-up in oil prices as well as my belief that oil prices will most likely continue to move higher in the long-term would be a boon to FLR as it is one of the larger EPC's which operates in the oil & gas space. For these reasons as well as a recent drop in the share price under $50 I decided to open a CC position. The profit/loss info is below:

10/7/2009 -- Bought 100 FLR @ 47.07
10/7/2009 -- Sold To Open 1 FLR November $50 Call @ 1.70

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: $4537.00

Potential Gain: 9.16%

Potential Annualized Gain If Called At Expiration (11/21/2009): 74.30%

Downside Protection: 3.6%

Closing Transactions - AT&T (T) and The Buckle (BKE)

Both AT&T (T) and The Buckle (BKE) were called away preceding an ex-dividend date as the time value remaining was very small in comparison with the dividend to be paid. The final profit/loss info is below:


AT&T (T)

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
10/7/2009 -- Stock Called Away @ 25.9543

Final Profit: 17.33%
Annualized Final Profit: 28.24%

The Buckle (BKE)

Transaction History:
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
9/18/2009 -- Sold To Open 1 BKE $30 October Call @ 0.85
10/7/2009 -- Stock Called Away @ 29.9542

Final Profit: 16.33%
Annualized Final Profit: 97.74%

Dividend Payment - SIMS Metal Management (SMS)

This is simply a dividend update for the position in SMS. I actually had forgotten about this dividend payment, even though it was one of the original reasons I found the stock. The new 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
10/6/2009 -- Dividend @ 0.08


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: 5.48%

Potential Annualized Gain If Called At Expiration: 105.21%

Dividend Payment - Best Buy (BBY)

This is simply a dividend update for my position in BBY. 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
10/4/2009 -- Dividend Payment @ 0.14

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: 14.58%

Annualized Max Upside: 41.91%

Update Transaction - Intrepid Potash (IPI)

After a large decline in the price of Intrepid Potash I decided to buy back the October call in case the price of Intrepid Potash greatly recovered as the expiration date grew closer. I plan to resell the $27 call if the price of IPI recovers. If not, I will most likely sell a November call. The new profit/loss info is below:

7/30/2009 -- Bought 100 IPI @ 26.70
7/30/2009 -- Sold To Open 1 IPI $27 August Call @ 1.54
7/30/2009 -- Bought To Open 1 IPI $22 August Put @ 0.45
8/21/2009 -- Call Expired
8/24/2009 -- Sold To Open 1 IPI $28 September Call @ 0.7
8/26/2009 -- Bought To Open 1 IPI $21 September Put @ 0.25
8/31/2009 -- Bought To Close 1 IPI $28 September Call @ 0.10
8/31/2009 -- Sold To Open 1 IPI $27 October Call @ 0.50
10/1/2009 -- Bought To Close 1 IPI $27 October Call @ 0.70

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $2561.00
Current Cost Average: $24.86

Possible Max Upside: N/A

Annualized Max Upside: N/A

Initial Transaction - Intel (INTC)

I decided to open another position in Intel after a drop in the price back near $19. It was another position intended to yield between a 10 and 20% annualized return. Intel was going to be releasing earnings in the following few weeks, and I would be glad to own it at the $17.50 cost averaged price. This was also an additional position utilizing the ex-dividend strategy I have described in previous posts. The profit/loss info is below:

10/1/2009 -- Bought 100 INTC @ 19.11
10/1/2009 -- Sold To Open 1 INTC November $18 Call @ 1.56

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: $1755.00

Potential Annualized Gain If Called At Ex-Div. Date (11/5/2009): 23.77%

Potential Annualized Gain If Called At Expiration (11/21/2009): 16.31%

Downside Protection: 8.2%