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Monday, October 26, 2009

October 2009 Expiration Day (10/16/2009)

The Covered Calls Investor Portfolio contained a total of 6 positions with October 2009 expirations, and 8 positions either with a Non-October expiration or no current covered call. The 6 positions with October expiration had the following results:

- 4 positions (BBY, LPHI, SMS, MRO) closed in-the-money.
The calls were exercised and the stock was sold. All of these positions had pretty good returns. SMS was looking as if it wasnt going to close in the money, but it had a pretty big run-up into expiration. The annualized gain/loss results (after commissions) were:

Best Buy (BBY) => 41.84% (Held Since 6/12/2009)
Life Partners Holdings (LPHI) => 61.11% (Held Since 8/31/2009)
SIMS Metal Management (SMS) => 111.05% (Held Since 9/28/2009)
Marathon Oil (MRO) => 31.10% (Held Since 8/24/2009)

- 2 positions in the portfolio (UNG, TZA) ended out-of-the-money. As is the norm with UNG, it yet again ended OTM.


United States Natural Gas (UNG) - $11.57
100 Shares with Current Cost Basis of $11.7275

This position will be kept, as I believe natural gas prices will eventually rebound. In the meantime, I will continue to sell calls against the three UNG positions which I still maintain. The risk factor in this position is mainly due to the way in which the ETF operates, as current CTFC proceedings have resulted in the company which manages UNG to have to invest in riskier instruments in order to track the price of natural gas.

Direxion 3x Small Cap Bear (TZA) - $11.17
100 Shares with Current Cost Basis of $11.65

This position is only being used as a hedge in case of a decline in the overall market. I will continue to hold this one position, and sell ITM calls against it. As it only accounts for a small percentage of my total portfolio I am not too worried about a large loss, in case of more large gains in the indices.


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

United States Natural Gas (UNG)(200 Shares) - January $13 and $14 Covered Calls

Intrepid Potash (IPI)(100 Shares) - November $27 Covered Call

ConocoPhillips (COP)(100 Shares) - January $39 Covered Call

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

Jack In The Box (JACK) - November $20 CSP

Omnicare (OCR)(100 Shares) - November $22.50 Covered Call

Fluor (FLR)(100 Shares) - November $50 Covered Call

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