August 2009 Expiration Day (8-21-2009)

The Covered Calls Investor Portfolio contained a total of 10 positions with August 2009 expirations, and 4 positions either with a Non-August expiration or no current covered call. The 10 positions with August expiration had the following results:

- 6 positions (T, BMY, FAS, CAL, UNG, PWE) closed in-the-money. The calls were exercised and the stock was sold. Most of these positions had been heavily ITM for quite a while so it was not surprising that they were called away. The only dissapoint in this group was the UNG CSP which was executed resulting in my purchase of the stock for $13. The annualized gain/loss results (after commissions) were:

AT&T => 49.41%
Bristol-Myers => 33.47%
Direxion 3x Financial Bull => 143.08%
Continental Airlines => 75.84%
United States Natural Gas => N/A because put was assigned, resulting in purchase of stock
Penn-West Energy => 37.67%


- 4 positions in the portfolio (UNG, UNG, IPI, T) ended out-of-the-money. AT&T managed to close exactly at its strike of $26 but was not called away.


United States Natural Gas (UNG) - $11.35
100 Shares with Current Cost Basis of $13.23

This position will be kept, mostly due to the fact that it is currently sporting about a 20% loss, and also the fact that natural gas remains at all-time lows. The only issue with this position is that due to caps being placed on positions in commodity futures, UNG has begun to trade at a premium to its NAV, effectively becoming a closed end fund which means it will not track the price of natural gas very well anymore. As a result it is unlikely I will continue to establish positions in the fund.

United States Natural Gas (UNG) - $11.35
100 Shares with Current Cost Basis of $11.90

See above for perspective.

Intrepid Potash (IPI) - $25.88
100 Shares with Current Cost Basis of $25.61

I will continue to hold this position, and sell another call for september. The fundamentals remain strong, and in my opinion the hypothesis surrounding the rebound in potash prices come next year remains to be true.

AT&T (T) - $26
100 Shares with Current Cost Basis of $22.59

Although I was attempting to exit my positions in AT&T, the covered call managed to not be called away. This isnt a disaster because AT&T still sports an attractive yield, and I can make another 1-2% for next month on it by selling another call.


The positions in the portfolio which did not have June expirations include:

Buckle (BKE) (100 Shares) - September $30 Covered Call

Conoco Phillips (COP) (100 Shares) - January $39 Covered Call

McGraw-Hill (MHP) (100 Shares) - September $30 Covered Call

Best Buy (BBY) (100 Shares) - September $39 Covered Call