Continuing Transactions - May 2009

After last Friday's expiration for May 2009, there were 11 positions which were retained and had options which had expired in May. Today it was decided to retain all of these positions based on continued option premium to be gathered, and a strong showing by the market today, which allowed for multiple in-the-money positions to be created which will still yield very high potential returns. There were only 2 positions which remain uncovered, AT&T (T) which was one of the few market movers to decline today, though all utilities had a poor showing today, and Omnicare (OCR), which I chose to set a limit order on the call which was not reached. The transactions to date and performance metrics for each of the positions is listed below.

1. Direxion 3x Financial Bull -- Continuation Transaction

As was explained in the post regarding May expirations, all positions in FAS will be kept through June expiration. The only notable difference, is that due to a drastic increase in the share price today, a $9, $10, and $11 call were sold instead of 1 $9 strike, and 2 $10 strikes. The new profit/loss projections are below:

4/9/2009 -- Bought 100 FAS @ 7.835
4/9/2009 -- Sold To Open 1 FAS May $8 Call @ 1.45

4/21/2009 – Bought To Close 1 FAS May $8 Call @ 0.85

4/21/2009 – Sold To Open 1 FAS May $9 Call @ 0.7

5/15/2009 – May $9 Call Expired

5/18/2009 – Sold To Open 1 FAS June $9 Call @ 1.5


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $783.50


Downside Coverage From Current Price: 51.2%
Possible Max Upside: 62.1%

Annualized Max Upside: 314.81%

2. Direxion 3x Financial Bull -- Continuation Transaction

The new profit/loss projections are below:

4/14/2009 -- Bought 100 FAS @ 9.245
4/14/2009 -- Sold To Open 1 FAS May $9 Call @ 0.9

4/15/2009 – Bought To Close 1 FAS May $9 Call @ 0.25

4/15/2009 – Sold To Open 1 FAS May $10 Call @ 0.95

5/15/2009 – May $10 Call Expired

5/18/2009 – Sold To Open 1 FAS June $10 Call @ 1.05


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $924.50


Downside Coverage From Current Price: 36%
Possible Max Upside: 40.8%

Annualized Max Upside: 222.28%

3. Direxion 3x Financial Bull -- Continuation Transaction

The new profit/loss projections are below:

4/17/2009 -- Bought 100 FAS @ 9.745
4/17/2009 -- Sold To Open 1 FAS May $8 Call @ 2.65

5/7/2009 – Bought To Close 1 FAS May $8 Call @ 3.55

5/7/2009 – Sold To Open 1 FAS May $10 Call @ 1.95

5/15/2009 – May $9 Call Expired

5/18/2009 – Sold To Open 1 FAS June $11 Call @ 0.95


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $974.50


Downside Coverage From Current Price: 26%
Possible Max Upside: 45.9%

Annualized Max Upside: 261.64%

4. Continental Airlines -- Continuation Transaction

Although Continental Airlines did eventually rebound above $11, it was my decision based on the other available covered call positions in my pipeline, that it would make the most sense to continue this position. The new profit/loss projections are below:

4/14/2009 -- Bought 100 CAL @ 12.225
4/17/2009 -- Sold To Open 1 CAL May $11 Call @ 2.17

5/15/2009 – May $11 Call Expired

5/18/2009 – Sold To Open 1 CAL June $11 Call @ 1.05

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1222.50


Downside Coverage From Current Price: 19%
Possible Max Upside: 19.84%

Annualized Max Upside: 108.09%

5. Mack-Cali Realty -- Continuation Transaction

As mentioned in the post for May expirations, the rather large position in CLI was not intended to remain after Friday. However, due to the large decrease in the stock price last week, all positions ended out of the money. In order to again attempt to reduce the position in CLI, but still capture value, additional calls have been sold with an emphasis on in-the-money calls. The new profit/loss projections are below:

Various -- Bought 100 CLI @ 20.91
3/2/2009 -- Sold To Open 1 CLI July $22.5 Call @ 1.2225

3/10/2009 – Bought To Close 1 CLI July $22.5 Call @ 1

4/1/2009 – CLI Dividend @ .45

4/3/2009 – Sold To Open 1 CLI May $22.5 Call @ 2.5

5/15/2009 – May $22.5 Call Expired

5/18/2009 – Sold To Open 1 CLI June $25 Call @ 0.95

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $2091.00


Downside Coverage From Current Price: 29%
Possible Max Upside: 40.58%

Annualized Max Upside: N/A

6. Mack-Cali Realty -- Continuation Transaction

The new profit/loss projections are below:

Various -- Bought 100 CLI @ 20.91
3/2/2009 -- Sold To Open 1 CLI July $22.5 Call @ 1.2225

4/1/2009 – CLI Dividend @ .45

3/10/2009 – Bought To Close 1 CLI July $22.5 Call @ 4.45

4/3/2009 – Sold To Open 1 CLI May $25 Call @ 1.7

5/15/2009 – May $25 Call Expired

5/18/2009 – Sold To Open 1 CLI June $22.50 Call @ 2.75

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $2091.00


Downside Coverage From Current Price: 20%
Possible Max Upside: 16.57%

Annualized Max Upside: N/A

7. Mack-Cali Realty -- Continuation Transaction

The new profit/loss projections are below:

Various -- Bought 100 CLI @ 22.90
2/23/2009 -- Sold To Open 1 CLI July $25 Call @ 0.4592

3/6/2009 – Bought To Close 1 CLI July $25 Call @ 0.1408

4/1/2009 – CLI Dividend @ .45

4/3/2009 – Sold To Open 1 CLI May $22.50 Call @ 2.8925

5/15/2009 – May $25 Call Expired

5/18/2009 – Sold To Open 1 CLI June $22.50 Call @ 1.8925

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $2290.00


Downside Coverage From Current Price: 26%
Possible Max Upside: 20.96%

Annualized Max Upside: N/A

8. Chesapeake Energy -- Continuation Transaction

After contemplating selling this position over the weekend I decided that I would overlook recent issues with executive compensation and a miss in the latest earnings report. This stock is mainly focused on natural gas, which has seen a drastic decrease in price since the commodity bust. Unlike crude oil, natural gas has not recovered in the recent stock market rally. Based on some work that I performed in a consulting project recently, it is my opinion that natural gas is quite undervalued currently in comparison to crude on an energy basis. As such, I believe that there is quite a lot of upside here. Additionally, the stock took the earnings news pretty well in stride, which makes me think there is some underlying strength here. As such a new covered call position was established this afternoon. The new profit/loss projections are below:

4/14/2009 -- Bought 100 CHK @ 21.095
4/14/2009 -- Sold To Open 1 CHK May $21 Call @ 1.86

5/6/2009 – Bought To Open 1 CHK May $19 Put @ 0.35

5/15/2009 – May $21 Call and $19 Put Expired

5/18/2009 – Sold To Open 1 CHK June $21 Call @ 1.25

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $2109.50


Downside Coverage From Current Price: 13%
Possible Max Upside: 13.85%

Annualized Max Upside: 75.48%