Initial Transaction - Genco Shipping (GNK)

An initial position in GNK was established on March 30, 2009. This position was actually found using a free option analyzer that I found earlier in the week which shows you the covered call stock/option combinations with the highest possible return. Using this I looked for a stock in an industry area which I did not currently have in my portfolio and that I believed would not add a lot of risk. The first stock on the list which met this criteria was Genco Shipping which is company which mostly charters its boats to charterers who transport dry goods. All stocks in this space have been battered in the recession, and Genco was not immune as it has dropped 86% from its peak. It was decided to establish a position and sell an at-the-money call, as the stock market has increased substantially since its bottom on March 9, it was my assumption that by options expiration on April 17, there was a possibility for the market to start moving downward or stagnate.

3/30/2009 -- Bought 100 GNK @ 12.635
3/30/2009 -- Sold To Open 1 GNK April $12.50 Call @ 1.36


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1263.50


Downside Coverage: 10.76%
Possible Max Upside: 10.47%

Annualized Max Upside: 125.6%

Initial Transaction - Direxion Large Cap Bull 3x (BGU)

A position in Direxion Large Cap Bull 3x Shares was established on March 24, 2009. This ETF returns 300% of the Russell 1000 index.

3/24/2009 -- Bought 100 BGU @ 25.395
3/24/2009 -- Sold To Open 1 BGU April $29 Call @ 1.20


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $2539.50


Downside Coverage: 4.7%
Possible Max Upside: 19.9%

Annualized Max Upside: 238.3%

Initial Transaction - Direxion Small Cap Bull 3x (TNA)

A position in Direxion Small Cap Bull 3x Shares was established on March 23, 2009. This ETF returns 300% of the Russell 2000 index. Since a position was established in BGU, an ETF which returns 3x large cap stocks with a relatively far out-of-the-money call, it was determined that the call for this position should be at the money to minimize overall risk of utilizing leveraged ETFs.

3/24/2009 -- Bought 100 TNA @ 17.545
3/24/2009 -- Sold To Open 1 TNA April $17.50 Call @ 2.2


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1754.50


Downside Coverage: 12.54%
Possible Max Upside: 13.75%

Annualized Max Upside: 165%

Initial Transaction - General Electric (GE)

A position in General Electric was established on March 23, 2009. This is essentially a continuation of the position that was held last month, restarted after the previous options expired. As opposed to the previous month, this call was established out of the money.

3/23/2009 -- Bought 100 GE @ 10.185
3/23/2009 -- Sold To Open 1 GE April $11 Call @ 0.47


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1018.50


Downside Coverage: 4.61%
Possible Max Upside: 12.76%

Annualized Max Upside: 153.17%

Update Transaction - Direxion 3xFinancial Bull (FAS)

The position in Direxion Financial Bull 3x was continued after expiring out-of-the-money in March. The new profit/loss projections are below:

3/18/2009 -- Bought 100 FAS @ 5.58
3/18/2009 -- Sold To Open 1 FAS March $6 Call @ .21
3/20/2009 -- March Option Expired
3/23/2009 -- Sold To Open 1 FAS April $6 Call @ 1.25


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $557.50


Downside Coverage: 26%
Possible Max Upside: 35%

Annualized Max Upside: 210.1%

Options Expiration - March 2009

The Covered Calls Investor Portfolio contained a total of 7 positions with March 2009 expirations, and 5 positions either with a Non-March expiration or no current covered call. The 7 positions with March expirations had the following results:
- 5 positions (GE, VLO, CAT, AA, AFL) closed in-the-money. The calls were exercised and the stock was sold. Quite a few of these investments ended quite a bit in the money. The annualized gain/loss results (after commissions) were:

General Electric (GE) => +91.3%
Valero Energy Corporation (VLO) => +81.97%
Caterpillar (CAT) => +63.6%
Alcoa (AA) => +57.1
Aflac (AFL) => +67.1%

- 2 positions in the portfolio (FAS and X) ended out-of-the-money. New calls will most likely be established on Monday, barring a large market decline. Both of these positions sitll offer quite large time premiums, and it is therefore the intention of this investor to sell slightl out of the money calls.

The positions in the portfolio which did not have March expirations include AT&T (T), Morgan Stanley (MS), Foster Wheeler (FWLT), Mack-Cali Realty (CLI), Johnson Controls (JCI). These positions are the following:

AT&T
200 Shares Owned
1 April $26 Call
100 shares are currently not covered

Morgan Stanley
100 Shares Owned
1 July $10 Call

Foster Wheeler
100 Shares Owned
1 August $12.50 Call

Mack-Cali Realty
600 Shares Owned
1 April $17.50 Call
1 July $22.50 Call
400 Shares Not Currently Covered

Johnson Controls
100 Shares Owned
1 April $10 Call


After Mack-Cali Realty and AT&T pass their ex-dividend dates, out-of-the money calls will be sold.

Initial Transaction - Direxion 3x Financial Bull (FAS)

A position in Direxion Financial Bull 3x Shares was established on March 18, 2009. This covered call purchase was simply to use the current volatility in financial share prices to make a quick profit, and if the etf did not end in the money, then a plan is in place to sell an at-the-money call on monday. This ETF returns 300% of the Russell 1000 Financial services index.

3/18/2009 -- Bought 100 FAS @ 5.58
3/18/2009 -- Sold To Open 1 FAS March $6 Call @ .21


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $553.00


Downside Coverage: 3.8%
Possible Max Upside: 11.7%

Annualized Max Upside: 140.7%

Initial Transaction - Johnson Controls (JCI)

A position in Johnson Controls was established on March 18, 2009. This purchase is due to the fact that this stock has been beaten down as a result of its overexposure to the architectural and automotive industries. As these markets are currently nearing their bottom (if they are not already there), Johnson is poised for an upside move. Additionally, from a long term perspective, Johnson Controls will benefit from its JV with Saft to manufacture many of the lithium ion batteries which will be used in upcoming hybrid vehicles.

3/18/2009 -- Bought 100 JCI @ 10.1049
3/18/2009 -- Sold To Open 1 JCI April $10 Call @ .90


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1010.49


Downside Coverage: 8.91%
Possible Max Upside: 8.15%

Annualized Max Upside: 97.8%

Update Transaction - AT&T (T)

Due to the extreme upward movement of the AT&T stock, along with its continued high yield, a few transactions were made to increase the possible upside potential of the covered call, namely buying back an April $25 strike call, and selling an April $26 strike call:

Transaction History:
Various Dates Initial Stock Purchase -- Bought 100 T @ 25.125
2/21/2009 -- Additional Stock Purchased -- Bought T @ 23
2/25/2009 -- Initial Calls Sold -- Sold 1 T March $24 Call @ .895
2/27/2009 -- Additional Calls Sold -- Sold 1 T April $20 Call @ 3.95
3/6/2009 -- Bought To Close 1 T March $24 Call @ .3874
3/10/2009 -- Bought To Close 1 T April $20 Call @ 2.93
3/10/2009 -- Sold to Open 1 T April $25 Call @ .34
3/13/2009 -- Bought To Close 1 T April $25 Call @ .84
3/13/2009 -- Sold To Open 1 T April $26 Call @ .39

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $4,812.50
Cost-Averaged Share Purchase Price: $24.06

After these changes, the downside coverage, and the upside changes, the new values are in bold:

Downside Coverage: 9.26% -> 2.94%
Possible Max Upside: 3.03% -> 6.97% (based on sale of the 100 shares which are still covered)

As can be seen the downside coverage has been extremely reduced, though this is due to the fact that 100 shares are currently not covered. It has been decided that there may still be some more upside left in the stock, before the market turns back around, and so a covered call will most likely be sold in the next week or so on the remaining 100 shares.

Update Transaction - General Electric (GE)

An additional position was established in General Electric on March 2, 2009. See previous GE purchase for rationalization. This covered call purchase was initially made based on the idea, that it was possible at the time for GE to go the way of Citi, and plummet to an unreasonable level. As such, the call was sold more than 35% in the money. However, as positive news began to emerge regarding GE, the call was rolled up to an earlier expiration and higher strike price.

3/2/2009 -- Bought 100 GE @ 8.0685
3/2/2009 -- Sold To Open 1 GE June $5 Call @ 3.60
3/12/2009 -- Bought To Close 1 GE June $5 Call @ 4.45
3/12/2009 -- Sold To Open 1 GE March $9 Call @ 0.53

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $806.85


Downside Coverage: 44.62% -> None After New Call Sold
Possible Max Upside: 6.03% -> 7.02% (This is the upside after factoring in initial cost, sale price of original option, cost to buy back option, and sale price of more recent option)

Annualized Max Upside: 18.09% -> 84.24%

Initial Transaction - AT&T (T)

Over the last few months, 200 shares of AT&T have been purchased, to establish a covered call position, the transactions to date are as follows:


Various Dates Initial Stock Purchase -- Bought 100 T @ 25.125
2/21/2009 Additional Stock Purchased -- Bought T @ 23
2/25/2009 Initial Calls Sold -- Sold 1 T March $24 Call @ .895
2/27/2009 Additional Calls Sold -- Sold 1 T April $20 Call @ 3.95
3/6/2009 Bought To Close 1 T March $24 Call @ .3874

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $4,812.50
Cost-Averaged Share Purchase Price: $24.06

Downside Coverage: 9.26%
Possible Max Upside: 3.03% (based on sale of the 100 shares which are still covered)

A new covered call will be sold on the 100 shares which are no longer covered, when the stock recovers slightly. This call will most likely be out of the money, due to the current depressed share price.

Initial Transaction - Aflac (AFL)

A position in Aflac was established on March 3, 2009. This covered call purchase was more of a speculative play than a neutral-bullish stance on the stock. Aflac has had increased volatility as a result of the general market mood regarding the financial industry, including insurers. This position was established due to the large downside coverage with a relatively modest upside.

3/3/2009 -- Bought 100 AFL @ 15.7359
3/3/2009 -- Sold To Open 1 AFL March $12.5 Call @ 3.99


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1573.59


Downside Coverage: 25.37%
Possible Max Upside: 4.17%

Annualized Max Upside: 50.18%

Initial Transaction - Foster Wheeler (FWLT)

A Foster Wheeler (FWLT) covered call position was established on March 2, 2009. The rationale behind this purchase is based upon this investor's opinion that infrastructure stocks as a whole have been battered as a result of the decrease in construction spending around the world, as well as a lack of focus within the recent stimulus bill on infrastructure spending as was originally intended. In regards to this stock specifically, Foster Wheeler had recently touched a new 52-week low in part due to its large decrease in backlog orders. Although a drop in the stock may have been warranted due to this fact, it should have already been priced into the stock, as it is simply a fact of the recession. However, this investor at the time this trade was executed was unsure if the economy would get even worse before it gets better, and so a relatively long position was established with an in-the-money call:

3/2/2009 -- Bought 100 FWLT @ 15.295
3/2/2009 -- Sold To Open 1 FWLT August $12.50 Call @ 4.95


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1529.50


Downside Coverage: 32.4%
Possible Max Upside: 13.8%

Annualized Max Upside: 27.6%

Initial Transaction - Morgan Stanley (MS)

A position was established in Morgan Stanley on March 2, 2009. The rational behind this position is that Morgan Stanley is one of the better positioned "bank" stocks to whether the rest of the credit crisis. It is also one of the few investment banks which has made it through the recession without being acquired either out of necessity or otherwise. For this particular stock, the decision was made to establish a relatively long covered call position mainly because of the large volatility inherent in financial stocks. The goal here was to provide a large amount of downside coverage while still yielding a worthwhile profit.

3/2/2009 -- Bought 100 MS @ 18.71
3/2/2009 -- Sold 1 MS July $10 Call @ 9.95

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1,871.00


Downside Coverage: -53.18%
Possible Max Upside: 6.39%-9.51% (The lower estimate is if the call is exercised before payment of any dividends, the higher estimate is if the stock is held through expiration and two dividends are payed)