My Covered Call Blog» My Covered Call Blog

Emerging Markets ETF (EEM) - Position Update

admin — Fri, 13 Mar 2009 03:24:07 +0000

Just like I did for the SSO, I sold my calls for my EEM position when the S&P was around 741.

Purchased: 100 @ 27.10
Initial Option Income: $1.08
Mar $24 Option Income: $0.34
Other Option Income: $0.60
Expected Return: -5.71% (-20.95%)
Last Period Expected Return: -3.17% (-17.58% annually)
Option periods held:3

* All return after buy and sell commissions
** Last Period Expected Return is the return I would have gotten if my option was exercised instead of expired.

Ultra S&P ETF (SSO) - Position Update

admin — Fri, 13 Mar 2009 03:21:48 +0000

Like I said I was going to do a few days ago, I sold my remaining calls when the S&P got to 741. Seeing that the market ran another percent and a half, I may have to roll these positions. Hopefully the market will take next week off and not surge another 4-5% and my underwater calls can expire worthless. I will sell the April calls when the market starts to look weak or we get back to S&P 800.

Position 1:
Purchased: 100 @ 33.85
Initial Option Income: $5.30
Mar $19 Option Income: $0.20
Other Option Income: $1.55
Expected Return: -29.11%

Position 2:
Purchased: 100 @ 31.28
Initial Option Income: $3.10
Mar $19 Option Income: $0.20
Other Option Income: $1.55
Expected Return: -27.93%

Position 3:
Purchased: 100 @ 30.55
Initial Option Income: $1.95
Mar $19 Option Income: $0.30
Other Option Income: $1.45
Expected Return: -29.23%

Alcoa (AA) - Position Update

admin — Tue, 10 Mar 2009 17:26:03 +0000

Into today’s strength, I took the opportunity to roll my position forward even though it had little to no chance of being called away in 10 days. I rolled it for 2 reasons. This market is going up today based on “strong” financial news. Citigroup said they were profitable for the past 2 quarters excluding items. If those items happen to be more writedowns, whats the point in being profitable. Now if the writedowns are included in that profitibilty, then I am wrong and I shouldn’t have done this. Reason 2 is that I think this rally will have a sell the news type reaction to the mark-to-market hearing on Thursday and also any results from the stress tests. Since the rolling out kept my annual return at ~42% (If I finally get called at $10), I am okay rolling this now. Eventually I will need to bite the bullet and roll out/up to the $10 for probably a net debit but I will face that when the situation presents itself.

Purchased: 200 @ 11.67
Initial Option Income: $1.95
Apr $7.50 Income: $0.37 (after buying back the Mar $7.50)
Other Option Income: $0.56
Dividend Income: $0.17
Expected Return: 12.5% (42.38% annually)
Last Period Expected Return: 9.26% (42.51% annually)
Option periods held: 4

* All return after buy and sell commissions
** Last Period Expected Return is the return I would have gotten if my option was exercised instead of expired.

Un-Hedging

admin — Mon, 02 Mar 2009 18:18:49 +0000

Today I sold my lone hedge, a March $80 SPY put. That is a bet that the S&P ETF, SPY, will be below $80 on March 20th. I sold it today when the market was making its first attempt below 710. I purchased the single contract on Jan 21st for $4.50. I sold it today for $9.70. That is a return of over 100% in just over a month. While the $500 profit doesn’t make up for the losses I am taking right now, it does help ease the pain.

The reason why I decided to sell was because the market is extremely oversold at the moment and I forsee the 700 level being a bit of support. As for my market prediction, I expect a bounce that should retest the November lows. As the S&P gets closer to that level, I will sell the calls for my current uncovered positions and look to rehedge with another S&P put.

Its ugly out there. Good Luck.

Alcoa (AA) - Update Position

admin — Tue, 24 Feb 2009 20:00:46 +0000

I took the liberty of selling my Acloa (AA) March calls into today’s rally in the general market. While this bounce may go further, I do believe that it will be short lived and that we will go through or bounce around the November lows in the S&P. With the global economy slowing, AA doesn’t look to be in a position of strength right now and I am okay holding it and taking in around 2% of my cost basis this month. In order to get my 2%, I needed to sell a $7.50 which will require rolling forward should the price stay above that come March expiration week.

Purchased: 200 @ 11.67
Initial Option Income: $1.95
Mar Option Income: $0.19
Other Option Income: $0.37
Dividend Income: $0.17
Expected Return: 9.26% (42.51% annually)
Last Period Expected Return: 5.84% (40.56% annually)
Option periods held: 3

* All return after buy and sell commissions
** Last Period Expected Return is the return I would have gotten if my option was exercised instead of expired.

BAC - Close Position

admin — Mon, 23 Feb 2009 16:46:13 +0000

Today before the market open, I closed my position in Bank of America. Last month I bought BAC at $6 and sold the $4 strike for $2.28. Last Friday BAC closed at $3.79 and I wasn’t exercised. Luckily, the financial sector rallied to open the day and I sold out in the morning for $4.30. Doing this vastly increased my return to my best return on a single position since I started this in October/November.

Details:
Buy: 200 @ $6.00 ($7 commission)
Net Investment: $1200.00
Initial Income: $446.50
Other Income: $0
Sold: 200 @ $4.30 ($7 commission)

Return: $92.50 (12.43%, 308.05% Annual)

February Expiration Wrap Up

admin — Mon, 23 Feb 2009 04:30:59 +0000

Here is what transpired during the Feb option period. Again, my current positions and historical positions are on my blog for all to see. Just check the upper right corner for the links.

Existing Positions on January 19, 2009: SSOx3, TBT, UYG (ugh), EEM, AA
Positions Opened During Period: 5
Positions Closed: 3

DRYS - closed out as a big loser.
FXI - closed out on day of expiration. Smaller gain than if I held until the end of the day.
TBT - called away.

Option Premium Generated: $1,448
Positions Open after Expiration: SSOx3, UYG (ugh), EEM, AA, USO, BAC

Current Holdings

admin — Fri, 20 Feb 2009 18:49:27 +0000

Since I added the historical performance page, I have also added a Current Holdings page to track what is currently in my portfolio. I haven’t added a place for my cash position. That will take some more work. I am also working on a better layout/design for the page. Right now, the information is correct (except for the returns on the partial SSO position). Again, any comments on what information should be available, please leave them.

FXI - Close Position

admin — Fri, 20 Feb 2009 18:44:00 +0000

I had originally sold a Feb $24 strike against FXI, the China ETF, when it was above $27. It was a small return but in 2 weeks, I didn’t think the markets could drop 15+%. Today, FXI broke below $25 and is currently at $24.70ish. Zecco has advanced option ordering and so I looked at what I would get if I closed out my position. The current price was $23.88. While $0.12 under my strike price, it gave me a positive return even after commissions. I decided to take that offer and close out my position.

I closed out the position basically to raise cash. I have decided to not roll any of my positions that will be closed out in order to increase my cash holdings. Things could get ugly here if the market doesn’t find a bounce.

Details:
Buy: 100 @ $27.19 ($0 commission)
Net Investment: $2719.00
Initial Income: $345.00
Other Income: $-100.00
Sold: 100 @ 24.83 ($0 commission)

Return: $9.00 (0.37%, 4.47% Annual)

Historical Performance

admin — Mon, 16 Feb 2009 22:46:07 +0000

This weekend I finally got around to creating a page to show my historical performance. You can currently find it in the upper-right corner of my blog. Or you can click this link and it will take you there. It is pretty ugly looking in its current form. It also doesn’t show all of the informationt hat I want it to. I will be working on it over the next couple weeks to improve the look and quality of the information provided. If you have any thoughts on how to improve it, feel free to leave them in the comments.