Update Transaction - Mack-Cali Realty (CLI)

After another (becoming somewhat normal) drop in the price of CLI, I decided to buy back my $25 call for one of my positions (out of 4). This is partially due to my continued belief in the strength of this particular REIT, as well as the fact that it will be paying a dividend in the beginning of July that I would like to get. However, I would like to reduce my overall position in CLI as it is a large portion of my total portfolio so I am keeping my other positions covered with 2 $22.50 June calls, and 1 $25 June call. 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

4/9/2009 – Sold To Open 1 CLI July $25 Call @ 2.1426

4/24/2009 -- Bought To Close 1 CLI July $25 Call @ 4.9474

4/24/2009 -- Sold To Open 1 CLI June $30 Call @ 1.9325

5/7/2009 -- Bought To Close 1 CLI June $30 Call @ 0.60

5/7/2009 – Sold To Open 1 CLI June $25 Call @ 1.5926

6/11/2009 – Bought To Close 1 CLI June $25 Call @ 0.25

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 (23.30): 2.5%
Possible Max Upside: Unlimited

Annualized Max Upside: Unlimited

Initial Transaction - United States Natural Gas (UNG)

Today I decided to open another position in UNG, an etf that "tracks" the price of natural gas. I decided that I wanted a longer position in the ETF than the June Covered call I currently have in my portfolio. See my previous post for purchase rationalization. The performance metrics are below:

6/10/2009 -- Bought 100 UNG @ 14.50
6/10/2009 -- Sold To Open 1 UNG July $15 Call @ 0.97

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


Downside Coverage: 6.69%
Possible Max Upside: 10.5%

Annualized Max Upside: 103.53%

Initial Transaction - Intel (INTC)

Today I opened a position in Intel (INTC) the largest supplier of processor chips for the computer industry among other things. The company is currently rated as a hold by the majority of analysts, though it has 4/5 stars from S&P. One of the important things to keep in mind about analyst ratings is that what often propels a stock upward is analyst upgrades; if a stock is rated as a buy by all analysts covering it, there isn't anywhere for them to go but down. This is why it is important to not only look to such ratings for help choosing a stock, but also create your own "analyst report" based on the information that the different reports give you. As is noted in many investing blogs/books/shows you must always do your own "homework," on the stock and not just trust that others are correct. My take on Intel is that it still essentially commands a monopoly for processors for all intents and purposes. Due to the faltering economy, consumers have moved toward cheaper computers, which tend to source chips from AMD. However, as the economy rebounds, it is likely that demand will switch back to more expensive Intel-based computers. Intel also provides chips to Apple computers now, and due to the sharp decrease in Apple laptop prices, any shift of demand to Mac laptops will at the worst keep the money in Intel as opposed to another semiconductor company. Lastly, at the cost averaged price of 15.84 (if Intel is not ITM at expiration) would result in a 3.5% yield which is pretty high for a tech company. Due to all these factors, and the fact that Intel has recently broken out of the $15-16 range, makes this a good buy. The performance metrics are below:

6/10/2009 -- Bought 100 INTC @ 16.28
6/10/2009 -- Sold To Open 1 INTC July $17 Call @ 0.44

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1584.00


Downside Coverage: 2.7%
Possible Max Upside: 7.32%

Annualized Max Upside: 70.34%

Closing Transaction - Chesapeake Energy (CHK)

After an increase in the stock price to around $24 I decided to exit this position and take my gains. There was less than 1% of additional gains left, and as has been said by other covered calls investors before, it is better to get out and leave a little on the table than hold until expiration and see your stock plummet. The profit info is 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
6/10/2009 - Bought To Close 1 CHK June $21 Call @ 2.74
6/10/2009 - Sold 100 CHK @23.52

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

Percentage Profit: 12.71%

Annualized Profit: 81.4%

Initial Transaction - United States Natural Gas (UNG)

Today I decided to open a position in UNG, an etf that "tracks" the price of natural gas. As I have mentioned in my previous posts for Chesapeake Energy, the ratio of natural gas and oil prices is out of whack with the historical average. As a result there needs to be a correction either in oil or natural gas prices. Although I do feel that oil prices are a bit ahead of themselves, natural gas prices are at levels that have not been seen since 2003, and the shift towards "greener" energy should increase demand for natural gas in the short term. As such, I think that this is a good way to play natural gas prices (though there could be a debate about the ability of UNG to effectively track natural gas prices). For the purpose of covered calls positions, this type of ETF can actually work very well because not as much of a gain is needed to make the same profit. For example, for this position, the etf cannot decrease more than 1.4% overall by expiration; however, if I were to only buy the stock it would have to go up by 2.8% to make the same profit. For this reason, the issue of "contango" is not as much of a concern. The performance metrics are below:

6/10/2009 -- Bought 100 UNG @ 14.20
6/10/2009 -- Sold To Open 1 UNG June $14 Call @ 0.63

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1357.00


Downside Coverage: 4.4%
Possible Max Upside: 2.8%

Annualized Max Upside: 102.21%

Update Transaction - Omnicare (OCR)

As discussed in my previous post regarding this position, I went ahead and sold a June $25 call on OCR in an effort to close the position. If the position closes out of the money on expiration day I wont be too disappointed as it will have further lowered my basis, and I dont think the stock would fall much further (knock on wood). The purchase info is below.

4/27/2009 -- Bought 100 OCR @ 26.465
4/27/2009 -- Sold To Open 1 OCR May $27.50 Call @ 1.25
5/15/2009 -- Call Option Expired
5/19/2009 -- Sold To Open 1 OCR June $27.5 Call @ 0.95
6/6/2009 -- Bought To Close 1 OCR June $27.5 Call @ 0.15
6/9/2009 -- Sold To Open 1 OCR June $25 Call @ 0.45


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $2646.50

If stock is called at expiration:

Downside Coverage (based on current share price): 1.8%
Possible Max Upside: 5.2%

Annualized Max Upside: 35.13%

Closing Transaction - CSX Corporation (CSX)

Today I closed out my position in CSX. I still feel that this stock is a good long term holding, but my profit was essentially maxed out, and I think the market is still due for a pull back, I may try to jump back into the stock around $32. The final purchase metrics are below:

5/27/2009 -- Bought 100 CSX @ 29.715
5/27/2009 -- Sold To Open 1 CSX June $30 Call @ 1.28
5/27/2009 -- Bought To Open 1 CSX June $26 Put @ 0.45
6/9/2009 -- Bought To Close 1 CSX June $30 Call @5.68
6/9/2009 -- Sold 100 CSX @ 35.49

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $2971.50

Final Upside: 3.2%

Annualized Max Upside: 89.91%