May 2009 Expiration Day

The Covered Calls Investor Portfolio contained a total of 16 positions with May 2009 expirations, and 3 positions either with a Non-March expiration or no current covered call. The 16 positions with May expirations had the following results:

- 5 positions (TOT, TIVO, TNA, FAS, TRLG) 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:

Total (TOT) => +58.76%
Tivo (TIVO) => +134.42%
Direxion 3x Small Cap (TNA) => +123.65%
Direxion 3x Financial (FAS) => +251.61%
True Religion (TRLG) => +174.72%

- 11 positions in the portfolio (T(2), CLI(3), FAS(3), CAL, CHK, OCR) ended out-of-the-money. This month's expiration was quite interesting, because many of the positions were in the money one or two days before expiration, and then fell below the strike on friday. In regards to the positions which will be kept, there are various reasons for each position, which are listed below.


AT&T (T) - $24.88
100 Shares with Current Cost Basis of $23.40
100 Shares with Current Cost Basis of $22.18

This position will be kept, due to the 7.2% dividend yield (based on current cost basis). Based on the current price, a $26 June call will be sold on Monday, while a $27 June call will be if the stock rebounds a bit.

Mack-Cali Realty (CLI) - $21.66
100 Shares with Current Cost Basis of $17.96
100 Shares with Current Cost Basis of $21.99
100 Shares with Current Cost Basis of $19.69

This position currently yields 9.5% (based on current cost basis). This remains a very large part of the portfolio, due to the drastic decrease from $27 at the end of April. It was my intention by selling very in the money calls at $22.50 that some of the this position would be called, but apparently it wasn't in the cards. In order to attempt to decrease this position, at least one $22.50 call will be sold. The other 2 positions will remain uncovered in order to wait for an increase in the share price to sell additional calls. I may also consider selling out of the money July calls to provide some protection, while allowing for the possibility to roll the call back to June if the stock rises.

Direxion 3x Financial (FAS) - $8.74
100 Shares with Current Cost Basis of $6.54
100 Shares with Current Cost Basis of $7.65
100 Shares with Current Cost Basis of $8.695

The positions in this ETF continue to yield great returns regardless of the closing price of the stock on expiration. It is my current plan to sell a $9, and 2 $10 June calls.

Continental Airlines (CAL) - $10.42
100 Shares with Current Cost Basis of $10.06

This position was in the money at the beginning of friday, and 5% out of the money by the end of the day. It is entirely possible that the stock could rebound to $11 on Monday, and if this occurs, the stock will be sold. If this does not happen, I will sell a $11 June call.

Chesapeake Energy (CHK) - $19.95
100 Shares with Current Cost Basis of $19.59

This position was also in the money a few days before expiration. I somewhat expected this stock to decrease in the few days before expiration after it had a poor earnings release, and bought a $19 strike put. Unfortunately, I overestimated the possible decrease in the stock, and both lost the $.30 in the put, and the stock closed out of the money. I still havent yet decided if I want to continue this position. If I do, I may both sell a call, and buy a put for extra security.

Omnicare (OCR) - $26.05
100 Shares with Current Cost Basis of $25.02

This position will most likely be continued due to the high volatility due to a continued view that the company may be acquired by Walgreens.


The positions in the portfolio which did not have May expirations include Bristol-Myers Squibb (BMY), Mack-Cali Realty (CLI), Savient Pharmaceuticals (SVNT). These positions are the following:

Bristol Myers Squibb
100 Shares Owned
1 June $21 Call

Mack-Cali Realty
100 Shares Owned
1 June $25 Call

Savient Pharmaceuticals
100 Shares Owned
1 June $5 Call