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

I have decided to close the short put position in TZA. In addition to this, I no longer plan to utilize any short etf strategies in my covered call portfolio. If I feel that the market is in the mood for a drop, I will simply sell deeper ITM options. The profit/loss info is below:

12/8/2009 -- Sold To Open 1 TZA January $10 Put @ 0.4824
12/29/2009 -- Bought To Close 1 TZA January $10 Put @ 0.9075

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

Potential Gain If Not Assigned At Expiration: -4.47%

Potential Annualized Gain If Not Assigned At Expiration: -81.51%

Dividend Payment - Discover Financial Services (DFS)

Dividend Update. The profit/loss info is below:

12/23/2009 -- Bought 100 DFS @ 14.81
12/23/2009 -- Sold To Open 1 DFS January $15 Call @ 0.45
12/29/2009 -- Dividend @ 0.02


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1436.00
Commissions (Included In Cost): $0
Current Cost Average: $14.34

Possible Max Upside: 3.90%

Annualized Max Upside: 59.31%

Initial Transaction - Verizon (VZ)

This is a second position in Verizon to take advantage of an upcoming ex-dividend date. The new profit/loss info is below:

12/24/2009 -- Bought 100 VZ @ 33.3599
12/24/2009 -- Sold To Open 1 VZ April $32 Call @ 1.81


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $3154.99
Commissions (Included In Cost): $5


Downside Coverage (from current price of $33.3599): 5.43%

Potential Annualized Gain If Called At First Ex-Div. Date (1/7/2010): 38.57%

Potential Annualized Gain If Called At Second Ex-Div. Date (4/7/2010): 10.29%

Potential Annualized Gain If Called At Expiration (4/17/2010): 14.21%

Initial Transaction - Discover Financial Services (DFS)

This is a new position being established in Discover Financial Services, a credit card company. It also currently yields about 0.5%. The profit/loss info is below:

12/23/2009 -- Bought 100 DFS @ 14.81
12/23/2009 -- Sold To Open 1 DFS January $15 Call @ 0.45


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1436.00
Commissions (Included In Cost): $0

Downside Coverage (from current price of $14.81): 3.03%

Possible Max Upside: 3.60%

Annualized Max Upside: 54.75%

Initial Transaction - The Buckle (BKE)

This is a new position being established in The Buckle, a retailer which focuses on denim apparel. It also currently yields about 2.73%. The profit/loss info is below:

12/23/2009 -- Bought 100 BKE @ 29.41
12/23/2009 -- Sold To Open 1 BKE January $30 Call @ 0.75


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $2866.00
Commissions (Included In Cost): $5

Downside Coverage (from current price of $29.41): 2.55%

Possible Max Upside: 4.13%

Annualized Max Upside: 62.86%

Initial Transaction - Suncor Energy (SU)

This is a new position being established in Suncor Energy, a Canadian company which focuses on developing the Athabasca oil sands. It also currently yields about 1%. The profit/loss info is below:

12/22/2009 -- Bought 100 SU @ 33.92
12/22/2009 -- Sold To Open 1 SU January $34 Call @ 1.0924


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $3282.76
Commissions (Included In Cost): $0.76

Downside Coverage (from current price of $33.92): 3.2%

Possible Max Upside: 3.15%

Annualized Max Upside: 46.05%

Update Transaction - Marathon Oil (MRO)

This is a new position being established in Marathon Oil, an integrated oil/gas company which currently yields a bit higher than 3%. The profit/loss info is below:

11/30/2009 -- Bought 100 MRO @ 32.64
11/30/2009 -- Sold To Open 1 MRO December $33 Call @ 0.71
12/18/2009 -- Call Expired
12/21/2009 -- Sold To Open 1 MRO January $33 Call @ 0.15


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $3193.00
Commissions (Included In Cost): $10
Current Cost Average: $31.78

Possible Max Upside: 3.66%

Annualized Max Upside: 28.46%

Update Transaction - United States Natural Gas (UNG)

The protective put purchased in November was sold for a small profit. The new profit/loss info is below:

6/11/2009 -- Bought 100 UNG @ 14.50
6/11/2009 -- 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 $14 Call @ 0.50
9/2/2009 -- Sold To Close 1 UNG October $10 Put @ 0.95
11/6/2009 -- Bought To Close 1 UNG January $14 Call @ 0.18
11/6/2009 -- Bought To Open 1 UNG December $9 Put @ 0.41
12/2/2009 -- Sold To Close 1 UNG December $9 Put @ 0.47
12/21/2009 -- Sold To Open 1 UNG February $13 Call @ 0.1725

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1353.00
Current Cost Average: $12.3775

Possible Max Upside: 4.6%

Annualized Max Upside: 6.61%

Update Transaction - United States Natural Gas (UNG)

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
11/6/2009 -- Bought To Open 1 UNG December $9 Put @ 0.41
11/18/2009 -- Sold To Close 1 UNG December $9 Put @ 0.5025
11/25/2009 -- Bought To Close 1 UNG January $13 Call @ 0.12
12/21/2009 -- Sold To Open 1 UNG February $13 Call @ 0.1725

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1226.00
Current Cost Average: $12.1825

Downside Coverage: None

Possible Max Upside: 6.67%

Annualized Max Upside: 11.48%

Update Transaction - Jack In The Box (JACK)

A January call was sold on this position. The new profit/loss info is below:

9/29/2009 -- Sold To Open 1 JACK November $20 Put @ 0.95
11/20/2009 -- Bought 100 JACK @ 20.05
11/23/2009 -- Sold To Open 1 JACK December $20 Call @ 0.25
12/18/2009 -- Call Expired
12/21/2009 -- Sold To Open 1 JACK January $20 Call @ 0.40

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $19.10

Possible Max Upside: 7.85%

Annualized Max Upside: 26.30%

Options Expiration Day - December 2009

The Covered Calls Investor Portfolio contained a total of 8 positions with December 2009 expirations, and 10 positions either with a Non-December expiration or no current covered call. The 8 positions with December expiration had the following results:

- 6 positions (IPI, AMAT, AMAT, INTC, UNG, EWY) closed in-the-money. The annualized gain/loss results (after commissions) were:

Intrepid Potash (IPI) => 35.96% (Held Since 7/30/2009)
Applied Materials (AMAT) => 28.65% (Held Since 10/20/2009)
Intel (INTC) => 14.84% (Held Since 10/21/2009)
Applied Materials (AMAT) => 40.64% (Held Since 11/11/2009)
United States Natural Gas (UNG) => 75.22% (Held Since 11/19/2009)
iShares South Korea ETF (EWY) => 39.42% (Held Since 11/30/2009)

- 2 positions in the portfolio (MRO, JACK) ended out-of-the-money.

Marathon Oil (MRO) - $30.91
100 Shares with Current Cost Basis of $31.93

Marathon Oil has continued to flutter around the $31 mark, since falling from a high of $35 in mid-November. I will continue to hold this position and sell a new call.

Jack In The Box (JACK) - $19.61
100 Shares with Current Cost Basis of $18.85

Over the past few days Jack In The Box has rebounded a bit, most likely due to simply being oversold after the earnings report in November. I will continue to hold this position and sell a new call.

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

United States Natural Gas (UNG)(300 Shares) - April $12 Call, 2 positions uncovered

Fluor (FLR) (100 Shares) - January $45 Call

MEMC Electronics (WFR) (100 Shares) - April $16 Call

Gamestop (GME) (100 Shares) - January $24 Covered Call

Verizon (VZ) (100 Shares) - April $31 Covered Call

New York Community Bancorp (NYB) (100 Shares) - April $12 Covered Call

Life Partners Holdings (LPHI) - 1 January $17.25 Put

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

I think the market may be reaching a short-term top, so I decided to hedge a little and sell a put on an ETF which returns 3x the inverse of the Russell 2000. The profit/loss info is below:

12/8/2009 -- Sold To Open 1 TZA January $10 Put @ 0.4824

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

Potential Gain If Not Assigned At Expiration: 4.82%

Potential Annualized Gain If Not Assigned At Expiration: 45.15%

Update Transaction - Fluor (FLR)

I decided to sell a call on FLR even though it will result in a slight loss, as the stock has fallen below the $40 mark recently. 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
11/20/2009 -- Call Expired
11/23/2009 -- Sold To Open 1 FLR December $45 Call @ 0.7
11/25/2009 -- Bought To Close 1 FLR December $45 Call @ 1.15
12/2/2009 -- Dividend @ 0.13
12/8/2009 -- Sold To Open 1 FLR January $45 Call @ 0.65

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: $4582.00
Current Cost Average: $45.04
Commissions (included in cost): $20

Potential Gain: -0.20%

Potential Annualized Gain If Called At Expiration: -0.71%

Update Transaction - Gamestop (GME)

I don't believe GME will rebound any time soon now, and so I will sell a new call. The new profit/loss info is below:

11/16/2009 -- Bought 100 GME @ 24.35
11/16/2009 -- Sold To Open 1 GME December $24 Call @ 1.42
12/2/2009 -- Bought To Close 1 GME December $24 Call @ 0.20
12/4/2009 -- Sold To Open 1 GME January $24 Call @ 0.30


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $2293.00
Current Cost Average: $22.83
Commissions (Included In Cost): $15

Downside Coverage: None

Possible Max Upside: 4.88%

Annualized Max Upside: 29.23%

Update Transaction - MEMC Electronic Materials (WFR)

I am preparing for a long wait, and so I sold an April $16 call. 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
12/2/2009 -- Sold To Open 1 WFR April $16 Call @ 0.55

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: 1495.00
Current Cost Average: $14.45

Potential Gain If Called At Expiration: 10.03%

Potential Annualized Gain If Called At Expiration: 20.57%

Update Transaction - Gamestop (GME)

The call sold on GME was bought back with the belief GME will rebound in the next few days and allow a new call to be sold. The new profit/loss info is below:

11/16/2009 -- Bought 100 GME @ 24.35
11/16/2009 -- Sold To Open 1 GME December $24 Call @ 1.42
12/2/2009 -- Bought To Close 1 GME December $24 Call @ 0.20


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $2293.00
Current Cost Average: $23.13
Commissions (Included In Cost): $10



Downside Coverage: None
Possible Max Upside: N/A

Annualized Max Upside: N/A

Dividend Payment - Fluor (FLR)

This is a dividend update for Fluor (FLR). 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
11/20/2009 -- Call Expired
11/23/2009 -- Sold To Open 1 FLR December $45 Call @ 0.7
11/25/2009 -- Bought To Close 1 FLR December $45 Call @ 1.15
12/2/2009 -- Dividend @ 0.13

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: $4582.00
Current Cost Average: $45.69

Potential Gain: N/A

Potential Annualized Gain If Called At Expiration: N/A

Update Transaction - United States Natural Gas (UNG)

The protective put purchased in November was sold for a small profit. The new profit/loss info is below:

6/11/2009 -- Bought 100 UNG @ 14.50
6/11/2009 -- 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 $14 Call @ 0.50
9/2/2009 -- Sold To Close 1 UNG October $10 Put @ 0.95
11/6/2009 -- Bought To Close 1 UNG January $14 Call @ 0.18
11/6/2009 -- Bought To Open 1 UNG December $9 Put @ 0.41
12/2/2009 -- Sold To Close 1 UNG December $9 Put @ 0.47

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1353.00
Current Cost Average: $12.55

Possible Max Upside: N/A

Annualized Max Upside: N/A

Initial Transaction - Marathon Oil (MRO)

This is a new position being established in Marathon Oil, an integrated oil/gas company which currently yields a bit higher than 3%. The profit/loss info is below:

11/30/2009 -- Bought 100 MRO @ 32.64
11/30/2009 -- Sold To Open 1 MRO December $33 Call @ 0.71


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $3193.00
Commissions (Included In Cost): $5


Downside Coverage (from current price of $32.64): 2.2%
Possible Max Upside: 3.09%

Annualized Max Upside: 59.38%

Initial Transaction - Life Partners Holdings (LPHI)

Today I decided to open a cash-secured put position in the Life Partners Holdings (LPHI), a company which I have been investing in for quite a few months now. The profit/loss info is below:

11/30/2009 -- Sold To Open 1 LPHI January $17.25 Put @ 1.1324

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

Potential Gain If Not Assigned At Expiration: 6.56%

Potential Annualized Gain If Not Assigned At Expiration: 50.98%

Initial Transaction - iShares MSCI South Korea Index (EWY)

Today I decided to open a cash-secured put position in the iShares South Korea Index which tracks the South Korean stock market. The profit/loss info is below:

11/30/2009 -- Sold To Open 1 EWY December $43 Put @ 0.8824

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

Potential Gain If Not Assigned At Expiration: 2.05%
Potential Annualized Gain If Not Assigned At Expiration: 39.42%

Update Transaction - Fluor (FLR)

Here is a good example of the difficulty of being human. This particular series of trades actually brought me to another important realization regarding the covered calls investing portfolio. I sold a call on the position on Nov. 23 which would have resulted in an extremely low return if called away, about 2% annualized. The next day the stock rose about 2.5% as a result of some comments made by Jim Cramer on his show. I took the emotional route, and bought back the call in the expectation that this rise would continue, but instead the stock began to fall, and I had simply lost $40 due to my actions. What I have come to realize as a result of this is regarding the reasoning behind selling calls which are either a few months out, or are very much out-of-the-money but very low premiums. The example would be the following:

Let's say you buy a stock at $40 and sell a $40 call for $1, which makes your cost basis $39. At expiration the stock is $35. A $40 call is $0.20, and a $37.50 call is $1. Now the normal response (at least for me), would be to sell the $40 call for $0.20. Except, an important thing to consider would be if you compare your options vs. establishing a new position if you were to simply exit the position, if you sell a $37.50 option, that would give you a 10% return. That kind of return is something that you would most likely not be able to find if you tried to create a new 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
11/20/2009 -- Call Expired
11/23/2009 -- Sold To Open 1 FLR December $45 Call @ 0.7
11/25/2009 -- Bought To Close 1 FLR December $45 Call @ 1.15

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: $4582.00

Potential Gain: N/A

Potential Annualized Gain If Called At Expiration: N/A

Update Transaction - United States Natural Gas (UNG)

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
11/6/2009 -- Bought To Open 1 UNG December $9 Put @ 0.41
11/18/2009 -- Sold To Close 1 UNG December $9 Put @ 0.5025
11/25/2009 -- Bought To Close 1 UNG January $13 Put @ 0.12

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1226.00
Current Cost Average: $12.355

Downside Coverage: None

Possible Max Upside: Unlimited

Annualized Max Upside: Unlimited

Update Transaction - Applied Materials (AMAT), Jack In The Box (JACK)

Below are positions which have been continued following the November expiration. The new profit/loss info is below:

Applied Materials (AMAT)

10/20/2009 -- Bought 100 AMAT @ 13.39
10/20/2009 -- Sold To Open 1 AMAT November $13 Call @ 0.76
11/9/2009 -- Dividend @ 0.06
11/20/2009 -- Call Expired
11/23/2009 -- Sold To Open 1 AMAT December $13 Call @ 0.2

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: 1237.00

Potential Gain If Called At Expiration: 4.59%
PotentialAnnualized Gain If Called At Expiration: 27.94%

Jack In The Box (JACK)

9/29/2009 -- Sold To Open 1 JACK November $20 Put @ 0.95
11/20/2009 -- Stock Purchase @ 20
11/23/2009 -- Sold To Open 1 JACK December $20 Call @ 0.25

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Current Cost Basis: 18.85

Possible Max Upside: 5.76%

Annualized Max Upside: 25.95%

Update Transaction - United States Natural Gas (UNG)

As I mentioned in my previous post for this position, I was considering selling a longer-term call against it as I would not be able to get enough premium if i sold a current month option. As such, I decided to sell an April $12 option on one of my 3 UNG positions. I only sold it on one of them, because I still think that UNG could move higher, but I want to hedge at least one of my positions. The new profit/loss info is 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
11/6/2009 -- Bought To Open 1 UNG December $9 Put @ 0.41
11/18/2009 -- Sold To Close 1 UNG December $9 Put @ 0.5025
11/23/2009 -- Sold To Open 1 UNG April $12 Call @ 0.38


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Purchase Price: $1190.00
Current Cost Average: $10.805
Commissions (Included In Cost): $40

Possible Max Upside: 6.85%

Annualized Max Upside: 17.60%

Options Expiration Day - November 2009

The Covered Calls Investor Portfolio contained a total of 7 positions with November 2009 expirations, and 10 positions either with a Non-November expiration or no current covered call. The 7 positions with November expiration had the following results:

- 3 positions (MHP, TZA, OCR) closed in-the-money. The calls were exercised and the stock was sold. OCR was established this month, and TZA and MHP was a holdover from the last few expirations. The annualized gain/loss results (after commissions) were:

McGraw-Hill (MHP) => 29.42% (Held Since 8/21/2009)
Direxion 3x Small Cap Bear => 18.7% (Held Since 9/14/2009)
Omnicare (OCR) => 36.51% (Held Since 9/29/2009)

- 4 positions in the portfolio (UNG, AMAT, FLR, JACK) ended out-of-the-money. As is the norm with UNG, it yet again ended OTM.


United States Natural Gas (UNG) - $9.01
100 Shares with Current Cost Basis of $11.185

I will continue to sell calls against all of my positions in UNG, while I wait for the price of natural gas to rebound. I do realize that this will take quite a while, but I consider this position to be a longer-term covered call position.

Applied Materials (AMAT) - $12.28
100 Shares with Current Cost Basis of $12.57

This position is one which I plan to hold for quite a well as well. The stock was pushed down as part of the sector downgrade which the semiconductor sector received this week. I believe the stock is still a good holding on a fundamental basis as it recently crushed earnings. I will continue to hold the position and sell a new call.

Fluor (FLR) - $44.32
100 Shares with Current Cost Basis of $45.37

After reporting lackluster earnings, FLR dropped from about $48 to under $45. Unfortunately, with the market declining in recent days, FLR has not been able to regain any of its lossed, even though it has been bordering on oversold territory for a few days. I will continue to hold the position and sell a new call.

Jack In The Box (JACK) - $18.55
100 Shares with Current Cost Basis of $19.10

Similar to Fluor, Jack In The Box recently reported earnings, and was obliterated from above $20 to down to $18 due to a dissapointing outlook, even though current quarter earnings beat estimates. I believe the company is still in the midst of moving from a non-franchise to franchise model, and thus will continue to be a turnaround play in the CCIP. I will be selling a new call on the position.


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

United States Natural Gas (UNG)(300 Shares) - December $9 Covered Call, January $13 Covered Call, 1 position uncovered

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

MEMC Electronics (WFR) (100 Shares) - Uncovered

Intel (INTC) (100 Shares) - December $19 Covered Call

Applied Materials - 1 December $13 CSP

Gamestop (GME) (100 Shares) - December $24 Covered Call

Verizon (VZ) (100 Shares) - April $31 Covered Call

New York Community Bancorp (NYB) (100 Shares) - April $12 Covered Call

Initial Transaction - United States Natural Gas (UNG)

I decided to open another covered call position in UNG, as I believe it has reached a near-term bottom around $8.80. Natural gas prices have been further depressed recently due to the continuing high storage levels as well as the relatively warm fall that the US has been experiencing. As such I think the risk/reward for this position is good. The profit/loss info is below:

11/19/2009 -- Bought 100 UNG @ 8.83
11/19/2009 -- Sold To Open 1 UNG December $9 Call @ 0.38


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $845.00
Commissions (Included In Cost): $5


Downside Coverage (from current price of $8.83): 4.3%
Possible Max Upside: 5.56%

Annualized Max Upside: 67.59%

Update Transaction - United States Natural Gas (UNG)

This is the other position which I sold the protective put. 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
11/6/2009 -- Bought To Open 1 UNG December $9 Put @ 0.41
11/18/2009 -- Sold To Close 1 UNG December $9 Put @ 0.5025

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1353.00
Current Cost Average: $12.235

Downside Coverage: None

Possible Max Upside: 6.24%

Annualized Max Upside: 12.8%

Update Transaction - United States Natural Gas (UNG)

After UNG passed below the $9 mark, I decided to exit two of my put positions which I bought to further cover a decline in the price of UNG. I will most likely be selling some calls on my UNG positions over the next few weeks even if they have to be longer-term in order to justify the sale. The new profit/loss info is 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
11/6/2009 -- Bought To Open 1 UNG December $9 Put @ 0.41
11/18/2009 -- Sold To Close 1 UNG December $9 Put @ 0.5025


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Purchase Price: $1190.00
Current Cost Average: $11.185
Commissions (Included In Cost): $35

Possible Max Upside: 6.85%

Annualized Max Upside: 17.60%

Initial Transaction - New York Community Bancorp (NYB)

This position was established as another Long-Term Ex-Dividend (LTEX) position in the CCIP. New York Community Bancorp is a regional bank based in New York which mainly provides mortgages to multi-family dwellings. It has a very low default rate and has consistently paid a dividend (currently at 8.87%). The stock has been stuck between $10 and $12 since the market lows in March. I decided to establish a long-term covered call position including one possible pre-expiration exercise date in February. The new profit/loss info is below:

11/16/2009 -- Bought 100 NYB @ 11.48
11/16/2009 -- Sold To Open 1 NYB April $12 Call @ 0.55


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1093.00
Commissions (Included In Cost): $5


Downside Coverage (from current price of $11.48): 4.8%

Potential Annualized Gain If Called At First Ex-Div. Date (2/4/2010): 38.78%

Potential Annualized Gain If Called At Expiration (4/17/2010): 27.90%

Initial Transaction - Verizon (VZ)

This is another position established with the proceeds from the sale of BMY and MCHP. This position is part of a strategy I call LTEX, which is a Long-Term Ex-Dividend Strategy vs. the STEX, or short-term ex-dividend strategy of which MCHP was an example. The idea with this position is to select a stock which has a high dividend yield, is typically a value stock, and tends to have low volatility (meaning low option premiums). In the LTEX, the goal is to provide multiple points during the holding period, where the stock may be called away (these points being the ex-dividend dates). Verizon was chosen due to its extremely high dividend yield (6.24%), its low volatility, technical support around 28.64, and the fact that it has not participated in the low-quality rally since March. The question may be asked why Verizon vs. AT&T. I chose Verizon because I feel that it has less risk than AT&T. This is due to a variety of reasons including its FiOS, fiber optic television system which has been grabbing up market share better than AT&T's Uverse. Its generally better regarded cellular network, and most importantly, the fact that Verizon does not have to worry about the possibility of losing iPhone exclusivity. The new profit/loss info is below:

11/16/2009 -- Bought 100 VZ @ 30.37
11/16/2009 -- Sold To Open 1 VZ April $31 Call @ 1.08


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $2930.00
Commissions (Included In Cost): $5


Downside Coverage (from current price of $30.37): 3.6%

Potential Annualized Gain If Called At First Ex-Div. Date (1/7/2010): 39.53%

Potential Annualized Gain If Called At Second Ex-Div. Date (4/7/2010): 19.04%

Potential Annualized Gain If Called At Expiration (4/17/2010): 21.64%

Initial Transaction - GameStop (GME)

On Monday I began to open new CC positions with the proceeds from the sale of BMY and MCHP. This position is one of the more risky positions in the CCIP for the fact that GME will announce earnings in a few days, which is part of the reason for the high option premium. I feel that this risk is warranted however for a few reasons. The first is mainly a technical reason, in that the stock has recently found support around the $24 level, and was also quite a bit oversold recently. Another reason, is that the stock has been "talkd down" by a number of talking heads including Jim Cramer. Many people have cited weakening hardware sales as well as poor new game releases this year. I believe on the other hand, the Gamestop benefits from the weakened economy in its used game sales, which it makes good margins on, as well as the recent release of Call of Duty which broke sales records. For all these reasons I believe Gamestop to be a good holding for the CCIP. The new profit/loss info is below:

11/16/2009 -- Bought 100 GME @ 24.35
11/16/2009 -- Sold To Open 1 GME December $24 Call @ 1.42


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $2293.00
Commissions (Included In Cost): $5


Downside Coverage (from current price of $24.35): 5.8%
Possible Max Upside: 4.25%

Annualized Max Upside: 47.01%

Closing Transaction - Microchip Technology (MCHP)

This position was 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. As planned, the position was called away the last trading day before its ex-dividend date. The final 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
11/13/2009 -- Sold 100 MCHP @ 24.9543

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

Final Profit: 1.44%
Potential Annualized Gain If Called At Ex-Div Date: 21.90%

Closing Transaction - Bristol-Myers Squibb (BMY)

I decided to close this position early, as Bristol Myers was substantially above the $22 strike price of the CC. I had entered this position as a way to continue a similar annualized return to the position I had held in COP which was called away pre-ex-dividend date. As there was essentially no time value remaining in the CC, I closed the position in order to apply the capital elsewhere. The final 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
11/13/2009 -- Bought To Close/Sold 200 BMY @ 21.9425


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

Final Profit: 1.40%

Annualized Max Upside: 22.18%

Update Transaction - Intrepid Potash (IPI)

As the market continues to think about which direction it wants to go in, the agricultural stocks decided to move higher. As a result I rolled forward my November call position in IPI to December as the stock continues to have pretty high premiums, and has stayed somewhat detached from overall market movements as of late. I think this is a relatively good long term holding as potash companies should be seeing a rebound in demand sometime in the next 12 months as a result of the necessity of their product. Farmers cant go without fertilizer for too long without ill effects. My general rule for rolling a call to the next month is that I must maintain or increase my annualized gain, in this case I kept it almost exactly the same. 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
11/12/2009 -- Bought To Close 1 IPI $27 November Call @ 0.71
11/12/2009 -- Sold To Open 1 IPI $27 December Call @ 1.41

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: $23.46

Previous Max Upside: 11.29%
New Possible Max Upside: 14.07%

Previous Annualized Max Upside:36.14%
Annualized Max Upside: 36.17%

Initial Transaction - Applied Materials (AMAT)

Today I decided to open a second position in Applied Materials (AMAT). This position is a cash-secured put, which basically means that I have sold the right for someone to sell me 100 shares of AMAT at $13/share at December expiration, if the stock price is below that. The position in Applied Materials was opened as it continues to be 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% as noted in my previous position on it. The profit/loss info is below:

11/11/2009 -- Sold To Open 1 AMAT December $13 Put @ 0.55

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: 4.23%
Potential Annualized Gain If Called At Expiration: 40.64%

Update Transaction - United States Natural Gas (UNG)

The information regarding this transaction is noted in the previous post on UNG from today. This position is now uncovered, and protected on the downside with a $9 put. 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 $14 Call @ 0.50
9/2/2009 -- Sold To Close 1 UNG October $10 Put @ 0.95
11/6/2009 -- Bought To Close 1 UNG January $14 Call @ 0.18
11/6/2009 -- Bought To Open 1 UNG December $9 Put @ 0.41


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

Possible Max Upside: N/A

Annualized Max Upside: N/A

Update Transaction - United States Natural Gas (UNG)

Information regarding this transaction is noted in the previous post on UNG. 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
11/6/2009 -- Bought To Open 1 UNG December $9 Put @ 0.41

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

Downside Coverage: Covered below $9

Possible Max Upside: 2.14%

Annualized Max Upside: 4.39%

Update Transaction - United States Natural Gas (UNG)

As per the norm, UNG continues to drag down the CCIP at some points, and pull it up at others. UNG has plummeted from the $12 mark it was near at October expiration to near $9.50. As a result I decided to buy some December $9 put protection for all three positions, as well as buying back a January call for one of the positions which will be noted in another post. The new profit/loss info is 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
11/6/2009 -- Bought To Open 1 UNG December $9 Put @ 0.41


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

Possible Max Upside: 2.63%

Annualized Max Upside: 6.75%

Dividend Payment - Intel (INTC)

This is simply an update to the Intel position which notes the passing of the ex-dividend date. The new 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
11/4/2009 -- Dividend @ 0.14

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: $1865.50

Potential Annualized Gain If Called At Expiration (12/19/2009): 14.43%

Downside Protection: 6.5%

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%

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%

Update Transaction - Intrepid Potash (IPI)

Intrepid Potash has been oscillating between about 22 and 26 dollars over the past few weeks, and with the the market continuing to drive higher with no intention of falling back, I decided to roll my IPI call to October at a slightly lower strike in order to hedge my risk as well as increase the risk of the stock being called away at October expiration. The performance metrics are 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



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: $24.76

Possible Max Upside: 8.90%

Annualized Max Upside: 41.13%

Monthly Returns - August 2009

The month of August was unfortunately the first negative month for the CCIP. The portfolio was dragged down by the horrible performance of UNG which reduced the overall portfolio performance of the CCIP by about 3%. Premiums have continued to decline as the VIX has stayed in a relatively low range which has been helpful to those who wish to cover downside risk by purchasing protective puts, but not for those looking to sell premium. Every once in a while an investment choice does not do what you expect, and this possibility has to always be considered when selecting asset allocation. As I noted in my post on asset allocation within a covered call portfolio it is extremely important not to weight any one of your positions too heavily. Unfortunately, UNG represented about 10% of my overall portfolio, and so its 30% decline substantially impacted overall portfolio performance. The fact that the overall portfolio only dropped slightly was a testament, however, to the successful choices in other parts of the portfolio.

Unfortunately, as well as the under-performance by the CCIP in August, the portfolio has also lost much of the ground it had over the benchmark, S&P 500. Although it is still ahead of the market, its "lead" has been reduced. This brings up an important point regarding a covered call portfolio, as well as the general strategy of the CCIP. It is my intention, not to necessarily consistently beat the market, but instead to provide a constant return of at least 10%. However, this is not to say that I do not want to maximize my possible returns. This is why I have adopted additional strategies to enhance my returns. These include the new ex-dividend date strategy which thus far has been executed 3 times, one of these times being called away successfully at the ex-div date. The second strategy involves purchasing an OTM SPY call in order to participate in additional upside if the market increases substantially over a month.

The portfolio continues to beat the market since its inception (by about 7.5%). The chart below presents the monthly performance of the CCIP for August, as well as the performance of the portfolio since inception.

Portfolio Results

The 2009 Since Inception results are as follows:

1. Since Inception Results

CCIP Absolute Return (March 7 through August 31, 2009) = 54.06%

Benchmark S&P 500 (SPY) Absolute Return (March 7 through August 31, 2009) = 46.54%

The CCIP has outperformed the S&P 500 benchmark by a total of 7.54%

September 2009 Next Steps

The month of September is going to be a real test for the rally's strength. The summer vacation is over, and reality is beginning to set in. Third quarter earnings will start this month, and will ultimately determine the direction of the market. Companies will now have to show that after substantially cutting costs they can start to increase sales.

The CCIP has made a bit of a change of direction as well over the last two months, as I have added additional strategies such as cash-secured puts, OTM calls, and the ex-dividend date strategy. Additionally, I have adopted a new type of allocation strategy which focuses on reducing risk, and centering strategy around specific annualized return goals.

Unfortunately, I will be going on vacation the week after expiration and will not have access to the internet. This obviously makes option roll-over a bit difficult. As a result I will most likely be closing ITM positions on the Thursday prior to expiration, and then opening new positions on expiration Friday. This may result in losing out on about 0.25% of gains, but it is better than missing a week of market action

The strategy for establishing covered calls positions after September expiration will depend on what positions close ITM at expiration. I will establish new positions based upon my new annualized return asset allocation strategy.

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