November Expiration Day

The Covered Calls Investor Portfolio contained a total of 7 positions with November 2009 expirations, and 10 positions either with a Non-November expiration or no current covered call. The 7 positions with November expiration had the following results:

- 3 positions (MHP, TZA, OCR) closed in-the-money. The calls were exercised and the stock was sold. OCR was established this month, and TZA and MHP was a holdover from the last few expirations. The annualized gain/loss results (after commissions) were:

McGraw-Hill (MHP) => 29.42% (Held Since 8/21/2009)
Direxion 3x Small Cap Bear => 18.7% (Held Since 9/14/2009)
Omnicare (OCR) => 36.51% (Held Since 9/29/2009)

- 4 positions in the portfolio (UNG, AMAT, FLR, JACK) ended out-of-the-money. As is the norm with UNG, it yet again ended OTM.


United States Natural Gas (UNG) - $9.01
100 Shares with Current Cost Basis of $11.185

I will continue to sell calls against all of my positions in UNG, while I wait for the price of natural gas to rebound. I do realize that this will take quite a while, but I consider this position to be a longer-term covered call position.

Applied Materials (AMAT) - $12.28
100 Shares with Current Cost Basis of $12.57

This position is one which I plan to hold for quite a well as well. The stock was pushed down as part of the sector downgrade which the semiconductor sector received this week. I believe the stock is still a good holding on a fundamental basis as it recently crushed earnings. I will continue to hold the position and sell a new call.

Fluor (FLR) - $44.32
100 Shares with Current Cost Basis of $45.37

After reporting lackluster earnings, FLR dropped from about $48 to under $45. Unfortunately, with the market declining in recent days, FLR has not been able to regain any of its lossed, even though it has been bordering on oversold territory for a few days. I will continue to hold the position and sell a new call.

Jack In The Box (JACK) - $18.55
100 Shares with Current Cost Basis of $19.10

Similar to Fluor, Jack In The Box recently reported earnings, and was obliterated from above $20 to down to $18 due to a dissapointing outlook, even though current quarter earnings beat estimates. I believe the company is still in the midst of moving from a non-franchise to franchise model, and thus will continue to be a turnaround play in the CCIP. I will be selling a new call on the position.


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

United States Natural Gas (UNG)(300 Shares) - December $9 Covered Call, January $13 Covered Call, 1 position uncovered

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

MEMC Electronics (WFR) (100 Shares) - Uncovered

Intel (INTC) (100 Shares) - December $19 Covered Call

Applied Materials - 1 December $13 CSP

Gamestop (GME) (100 Shares) - December $24 Covered Call

Verizon (VZ) (100 Shares) - April $31 Covered Call

New York Community Bancorp (NYB) (100 Shares) - April $12 Covered Call

Initial Transaction - United States Natural Gas (UNG) (11/19/2009)

I decided to open another covered call position in UNG, as I believe it has reached a near-term bottom around $8.80. Natural gas prices have been further depressed recently due to the continuing high storage levels as well as the relatively warm fall that the US has been experiencing. As such I think the risk/reward for this position is good. The profit/loss info is below:

11/19/2009 -- Bought 100 UNG @ 8.83
11/19/2009 -- Sold To Open 1 UNG December $9 Call @ 0.38


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $845.00
Commissions (Included In Cost): $5


Downside Coverage (from current price of $8.83): 4.3%
Possible Max Upside: 5.56%

Annualized Max Upside: 67.59%

Update Transaction - United States Natural Gas (UNG) (11/18/2009)

This is the other position which I sold the protective put. The performance metrics are below:

7/23/2009 -- Bought 100 UNG @ 13.14
7/23/2009 -- Sold To Open 1 UNG July $13 Call @ 0.88
8/22/2009 -- Call Expired
8/30/2009 -- Sold To Open 1 UNG October $14 @ 0.25
9/2/2009 -- Bought To Close 1 UNG October $14 @ 0.18
9/2/2009 -- Sold To Open 1 UNG January $12 @ 0.68
9/10/2009 - Bought To Close 1 UNG January $12 @ 0.9
9/10/2009 -- Sold To Open 1 UNG January $13 @ 1.29
11/6/2009 -- Bought To Open 1 UNG December $9 Put @ 0.41
11/18/2009 -- Sold To Close 1 UNG December $9 Put @ 0.5025

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1353.00
Current Cost Average: $12.235

Downside Coverage: None

Possible Max Upside: 6.24%

Annualized Max Upside: 12.8%

Update Transaction - United States Natural Gas (UNG) (11/18/2009)

After UNG passed below the $9 mark, I decided to exit two of my put positions which I bought to further cover a decline in the price of UNG. I will most likely be selling some calls on my UNG positions over the next few weeks even if they have to be longer-term in order to justify the sale. The new profit/loss info is below:

7/2/2009 -- Sold To Open 1 UNG August $13 Put @ 1.15
8/21/2009 -- Stock Purchase @ $13
8/24/2009 -- Sold To Open 1 UNG October $13 Call @ 0.60
9/2/2009 -- Bought To Open 1 UNG October $8 Put @ .4275
10/16/2009 -- Option Expiration
10/20/2009 -- Sold To Open 1 UNG November $12 Call @ .45
11/6/2009 -- Bought To Open 1 UNG December $9 Put @ 0.41
11/18/2009 -- Sold To Close 1 UNG December $9 Put @ 0.5025


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Purchase Price: $1190.00
Current Cost Average: $11.185
Commissions (Included In Cost): $35

Possible Max Upside: 6.85%

Annualized Max Upside: 17.60%

Initial Transaction - New York Community Bancorp (NYB) (11/16/2009)

This position was established as another Long-Term Ex-Dividend (LTEX) position in the CCIP. New York Community Bancorp is a regional bank based in New York which mainly provides mortgages to multi-family dwellings. It has a very low default rate and has consistently paid a dividend (currently at 8.87%). The stock has been stuck between $10 and $12 since the market lows in March. I decided to establish a long-term covered call position including one possible pre-expiration exercise date in February. The new profit/loss info is below:

11/16/2009 -- Bought 100 NYB @ 11.48
11/16/2009 -- Sold To Open 1 NYB April $12 Call @ 0.55


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1093.00
Commissions (Included In Cost): $5


Downside Coverage (from current price of $11.48): 4.8%

Potential Annualized Gain If Called At First Ex-Div. Date (2/4/2010): 38.78%

Potential Annualized Gain If Called At Expiration (4/17/2010): 27.90%

Initial Transaction - Verizon (VZ) (11/16/2009)

This is another position established with the proceeds from the sale of BMY and MCHP. This position is part of a strategy I call LTEX, which is a Long-Term Ex-Dividend Strategy vs. the STEX, or short-term ex-dividend strategy of which MCHP was an example. The idea with this position is to select a stock which has a high dividend yield, is typically a value stock, and tends to have low volatility (meaning low option premiums). In the LTEX, the goal is to provide multiple points during the holding period, where the stock may be called away (these points being the ex-dividend dates). Verizon was chosen due to its extremely high dividend yield (6.24%), its low volatility, technical support around 28.64, and the fact that it has not participated in the low-quality rally since March. The question may be asked why Verizon vs. AT&T. I chose Verizon because I feel that it has less risk than AT&T. This is due to a variety of reasons including its FiOS, fiber optic television system which has been grabbing up market share better than AT&T's Uverse. Its generally better regarded cellular network, and most importantly, the fact that Verizon does not have to worry about the possibility of losing iPhone exclusivity. The new profit/loss info is below:

11/16/2009 -- Bought 100 VZ @ 30.37
11/16/2009 -- Sold To Open 1 VZ April $31 Call @ 1.08


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $2930.00
Commissions (Included In Cost): $5


Downside Coverage (from current price of $30.37): 3.6%

Potential Annualized Gain If Called At First Ex-Div. Date (1/7/2010): 39.53%

Potential Annualized Gain If Called At Second Ex-Div. Date (4/7/2010): 19.04%

Potential Annualized Gain If Called At Expiration (4/17/2010): 21.64%

Initial Transaction - Gamestop (GME) (11/16/2009)

On Monday I began to open new CC positions with the proceeds from the sale of BMY and MCHP. This position is one of the more risky positions in the CCIP for the fact that GME will announce earnings in a few days, which is part of the reason for the high option premium. I feel that this risk is warranted however for a few reasons. The first is mainly a technical reason, in that the stock has recently found support around the $24 level, and was also quite a bit oversold recently. Another reason, is that the stock has been "talkd down" by a number of talking heads including Jim Cramer. Many people have cited weakening hardware sales as well as poor new game releases this year. I believe on the other hand, the Gamestop benefits from the weakened economy in its used game sales, which it makes good margins on, as well as the recent release of Call of Duty which broke sales records. For all these reasons I believe Gamestop to be a good holding for the CCIP. The new profit/loss info is below:

11/16/2009 -- Bought 100 GME @ 24.35
11/16/2009 -- Sold To Open 1 GME December $24 Call @ 1.42


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $2293.00
Commissions (Included In Cost): $5


Downside Coverage (from current price of $24.35): 5.8%
Possible Max Upside: 4.25%

Annualized Max Upside: 47.01%

Closing Transaction - Microchip Technologies (MCHP) (11/13/2009)

This position was another in my ex-dividend strategy, which involves creating an ITM covered call position in a company which has an ex-dividend date prior to the expiration date of the option. As planned, the position was called away the last trading day before its ex-dividend date. The final profit/loss info is below:

10/20/2009 -- Bought 100 MCHP @ 26.14
10/20/2009 -- Sold To Open 1 MCHP November $25 Call @ 1.54
11/13/2009 -- Sold 100 MCHP @ 24.9543

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: 2460.00

Final Profit: 1.44%
Potential Annualized Gain If Called At Ex-Div Date: 21.90%

Closing Transaction - Bristol Myers Squibb (BMY) (11/13/2009)

I decided to close this position early, as Bristol Myers was substantially above the $22 strike price of the CC. I had entered this position as a way to continue a similar annualized return to the position I had held in COP which was called away pre-ex-dividend date. As there was essentially no time value remaining in the CC, I closed the position in order to apply the capital elsewhere. The final profit/loss info is below:

10/29/2009 -- Bought 200 BMY @ 22.2025
10/29/2009 -- Sold To Open 2 BMY November $22 Call @ 0.5625
11/13/2009 -- Bought To Close/Sold 200 BMY @ 21.9425


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $4328.00

Final Profit: 1.40%

Annualized Max Upside: 22.18%

Update Transaction - Intrepid Potash (IPI)

As the market continues to think about which direction it wants to go in, the agricultural stocks decided to move higher. As a result I rolled forward my November call position in IPI to December as the stock continues to have pretty high premiums, and has stayed somewhat detached from overall market movements as of late. I think this is a relatively good long term holding as potash companies should be seeing a rebound in demand sometime in the next 12 months as a result of the necessity of their product. Farmers cant go without fertilizer for too long without ill effects. My general rule for rolling a call to the next month is that I must maintain or increase my annualized gain, in this case I kept it almost exactly the same. The new profit/loss info is below:

7/30/2009 -- Bought 100 IPI @ 26.70
7/30/2009 -- Sold To Open 1 IPI $27 August Call @ 1.54
7/30/2009 -- Bought To Open 1 IPI $22 August Put @ 0.45
8/21/2009 -- Call Expired
8/24/2009 -- Sold To Open 1 IPI $28 September Call @ 0.7
8/26/2009 -- Bought To Open 1 IPI $21 September Put @ 0.25
8/31/2009 -- Bought To Close 1 IPI $28 September Call @ 0.10
8/31/2009 -- Sold To Open 1 IPI $27 October Call @ 0.50
10/1/2009 -- Bought To Close 1 IPI $27 October Call @ 0.10
10/8/2009 -- Sold To Open 1 IPI $27 November Call @ 0.70
11/12/2009 -- Bought To Close 1 IPI $27 November Call @ 0.71
11/12/2009 -- Sold To Open 1 IPI $27 December Call @ 1.41

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $2561.00
Current Cost Average: $23.46

Previous Max Upside: 11.29%
New Possible Max Upside: 14.07%

Previous Annualized Max Upside:36.14%
Annualized Max Upside: 36.17%

Initial Transaction - Applied Materials (AMAT)

Today I decided to open a second position in Applied Materials (AMAT). This position is a cash-secured put, which basically means that I have sold the right for someone to sell me 100 shares of AMAT at $13/share at December expiration, if the stock price is below that. The position in Applied Materials was opened as it continues to be at multi-year lows. The company has unfortunately had some negative earnings as of late, but I believe the stock has alot of upside potential in the future due to its work in the semiconductor area (it profits regardless of whose chip is used), as well as the solar area which should benefit from legislation and regulation in the next few years once all of this health care debate is over. The company yields about 2% as noted in my previous position on it. The profit/loss info is below:

11/11/2009 -- Sold To Open 1 AMAT December $13 Put @ 0.55

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: N/A

Potential Gain If Called At Expiration: 4.23%
Potential Annualized Gain If Called At Expiration: 40.64%

Update Transaction - United States Natural Gas (UNG)(3)

The information regarding this transaction is noted in the previous post on UNG from today. This position is now uncovered, and protected on the downside with a $9 put. The new profit/loss info is below:

6/10/2009 -- Bought 100 UNG @ 14.50
6/10/2009 -- Sold To Open 1 UNG July $15 Call @ 0.97
7/6/2009 -- Bought To Close 1 UNG July $15 Call @ 0.15
7/17/2009 -- Sold To Open 1 UNG August $15 Call @ 0.45
8/22/2009 -- Call Expired
8/28/2009 -- Bought To Open 1 UNG October $10 Put @ 0.65
9/1/2009 -- Sold To Open 1 UNG January $14 Call @ 0.50
9/2/2009 -- Sold To Close 1 UNG October $10 Put @ 0.95
11/6/2009 -- Bought To Close 1 UNG January $14 Call @ 0.18
11/6/2009 -- Bought To Open 1 UNG December $9 Put @ 0.41


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

Possible Max Upside: N/A

Annualized Max Upside: N/A

Update Transaction - United States Natural Gas (UNG) (2)

Information regarding this transaction is noted in the previous post on UNG. The performance metrics are below:

7/23/2009 -- Bought 100 UNG @ 13.14
7/23/2009 -- Sold To Open 1 UNG July $13 Call @ 0.88
8/22/2009 -- Call Expired
8/30/2009 -- Sold To Open 1 UNG October $14 @ 0.25
9/2/2009 -- Bought To Close 1 UNG October $14 @ 0.18
9/2/2009 -- Sold To Open 1 UNG January $12 @ 0.68
9/10/2009 - Bought To Close 1 UNG January $12 @ 0.9
9/10/2009 -- Sold To Open 1 UNG January $13 @ 1.29
11/6/2009 -- Bought To Open 1 UNG December $9 Put @ 0.41

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

Downside Coverage: Covered below $9

Possible Max Upside: 2.14%

Annualized Max Upside: 4.39%

Update Transaction - United States Natural Gas (UNG)

As per the norm, UNG continues to drag down the CCIP at some points, and pull it up at others. UNG has plummeted from the $12 mark it was near at October expiration to near $9.50. As a result I decided to buy some December $9 put protection for all three positions, as well as buying back a January call for one of the positions which will be noted in another post. The new profit/loss info is below:

7/2/2009 -- Sold To Open 1 UNG August $13 Put @ 1.15
8/21/2009 -- Stock Purchase @ $13
8/24/2009 -- Sold To Open 1 UNG October $13 Call @ 0.60
9/2/2009 -- Bought To Open 1 UNG October $8 Put @ .4275
10/16/2009 -- Option Expiration
10/20/2009 -- Sold To Open 1 UNG November $12 Call @ .45
11/6/2009 -- Bought To Open 1 UNG December $9 Put @ 0.41


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Purchase Price: $1190.00

Possible Max Upside: 2.63%

Annualized Max Upside: 6.75%

Dividend - Intel (INTC) (11/4/2009)

This is simply an update to the Intel position which notes the passing of the ex-dividend date. The new profit/loss info is below:

10/21/2009 -- Bought 100 INTC @ 19.795
10/21/2009 -- Sold To Open 1 INTC December $19 Call @ 1.14
11/4/2009 -- Dividend @ 0.14

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: $1865.50

Potential Annualized Gain If Called At Expiration (12/19/2009): 14.43%

Downside Protection: 6.5%

October 2009 Results

The month of October was the second negative month for the CCIP. The overall market was essentially flat for the month, though the benchmark SPY ETF was down slightly. Premiums have stayed low, as the VIX has continued to stay pretty low throughout the month. As I have been implementing my new investing strategy over the past month and a half I have noticed some interesting things in the movement of the account. Although I have not been “beating” the benchmark by very much my volatility has been much lower. The average daily move in the CCIP has been 0.7% in the month of October vs. 1.18% in the SPY (the median was also better, 0.69% vs. 1.08%). As one of my goals in the CCIP is to make it a better investment vehicle for those who don’t like to see huge swings in account value, this is very promising. In terms of individual positions, I continue to try to move out of my positions in UNG, and hopefully that will happen in the next few months. At least in this case, natural gas prices can’t go to 0, so my potential loss is not unlimited.

I have also started to track other metrics recently to judge the performance of the CCIP. One of these metrics is to understand the overall “profit yield” in the portfolio. The “profit yield” normalizes the potential returns of each position on an annualized basis to determine an overall portfolio potential annualized return. My goal is to keep this number above 25%, and it currently stands at 28.65%. I will report this number with each monthly update from now on.

The 2009 Since Inception results are as follows:

1. Since Inception Results

CCIP Absolute Return (March 7 through October 31, 2009) = 56.77%

Benchmark S&P 500 (SPY) Absolute Return (March 7 through October 31, 2009) = 48.11%

The CCIP has outperformed the S&P 500 benchmark by a total of 8.66%

November 2009 Next Steps

The month of November is bound to be full of surprises, as it seems that the rally is losing steam. Lately, I have also heard a lot of talk about a head and shoulders pattern beginning to form, which could mean a large drop in the market in the near future. As a result of this uncertainty, I have started moving some of my money into more stable companies, which have strong dividends and are less dependent on an improving economy. As I noted above, my current strategy aims for a portfolio annualized return of 25%, however this is adjusted downwards from where it stood at the beginning of the month, which was 35%.

As of right now, my current strategies for the CCIP include:

• Near-month covered calls
• Long-term covered calls
• Ex-dividend Strategy
• Cash-Secured Put Strategy
• Put Spread Strategy

The strategy for establishing covered calls positions after November expiration will depend on what positions close ITM at expiration. I will establish new positions based upon my annualized return asset allocation strategy in order to hit an overall portfolio return of 25%.

As always, please post any thoughts or questions you have regarding the CCIP and the posts on the blog.

Question And Answer

In an effort to encourage more interaction on the blog, I have decided to have a question and answer post once a month. I would like any of the blog readers to please post questions in response to this post that they may have regarding covered calls investing. Additionally, I would like any other covered call investing blog authors to feel free to help answer the questions as well. Hopefully this pilot works out well, and if so, I may expand it to more than once a month.

Initial Transaction - Bristol-Myers Squibb (BMY) (10/29/2009)

After my position in COP was called away on October 28, I decided to enter a similar type of return position with a November expiration. This position is in Bristol Myers Squibb, a pharmaceutical company which had a place in the CCIP from April until July this year. Since running up to above $22 in July right before expiration, the stock has been relatively flat. I believe that pharmaceuticals offer a unique investment in the healthcare space, as the effect on them from upcoming health care legislation should already be priced into the stock as that section of the bill has essentially been written for months. Additionally, the stock pays a great dividend, and has traded in a relatively tight range for much of the last year. I chose to enter a current month call position as I am considering slightly altering my current strategy to utilize high dividend stocks and slightly ITM or slightly OTM calls. The new profit/loss info is below:

10/29/2009 -- Bought 200 BMY @ 22.2025
10/29/2009 -- Sold To Open 2 BMY November $22 Call @ 0.5625


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $4328.00


Downside Coverage (from current price of $22.2025): 2.5%
Possible Max Upside: 1.52%

Annualized Max Upside: 24.17%

Closing Transaction - ConocoPhillips (COP) (10/28/2009)

This was an experiment in my covered call investment strategy which I think worked out quite well. The idea with this type of position is to choose a stable company, paying an above average dividend which has pretty good option premiums and sell a longer term call. The purpose of selling a longer term call is to provide multiple "exit points" for the owner of the call you sold. They could call your stock away at the first ex-dividend date, the second ex-dividend date, or expiration (assuming the option is ITM). From a return perspective, I aim for a 10-20% return regardless of when the stock would be called away. For ConocoPhillips this plan worked wonderfully, and the stock was called away on the first ex-dividend date it hit, providing a fantastic 19.42% annualized return over two months. The profit/loss info is below:

8/13/2009 -- Bought 100 COP @ 43.93
8/13/2009 -- Sold To Open 1 COP January $39 Call @ 6.49
10/28/2009 -- Sold 100 COP @ 38.9539

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: 3759.00

Actual Gain: 4.04%

Annualized Gain: 19.42%

Update Transaction - MEMC Electronics Materials (WFR) (10/27/2009)

I decided to do one post for essentially three transactions taking place on two days as it all has to do with the same event. On October 22, WFR released earnings after the market closed which were pretty disastrous. Now, this should not have been a surprise to most, as they had previously stated earnings would be horrible due to plant shutdowns they had during the quarter. However, the stock essentially fell off a cliff at which point I decided to buy back the $16 call I had sold, and sell a $15 November Call, to essentially break even if called at expiration. This was done when the stock was at about $14. Unfortunately, the stock continued to fall, reaching almost $12 at which point I decided to buy back the $15 call, and essentially wait for somewhat of a bounce in order to resell a call. I think the stock was punished more than it should have been, and this opinion was somewhat echoed by an upgrade the stock received simply based on the drop in price. The analyst noted that their target was $15, the stock had fallen almost 20% under that price and was thus undervalued (I consider this to be a smarter analyst than most, as most analysts wouldnt upgrade on such a price decline, even though it makes sense based on the target). I plan to resell a call once the stock gets somewhere above $13.50, hopefully sooner rather than later. The profit/loss info is below:

10/21/2009 -- Bought 100 WFR @ 15.76
10/21/2009 -- Sold To Open 1 WFR November $16 Call @ 0.81
10/23/2009 -- Bought To Close 1 WFR November $16 Call @ 0.25
10/23/2009 -- Sold To Open 1 WFR November $15 Call @ 0.40
10/27/2009 -- Bought To Close 1 WFR November $15 Call @ 0.20

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: 1495.00

Potential Gain If Called At Expiration: N/A
PotentialAnnualized Gain If Called At Expiration: N/A

Initial Transaction - Intel (INTC) (10/21/2009)

After a somewhat premature exit from my positions in Intel, I decided to open a new position as part of my ex-dividend strategy. The company will pay a dividend to shareholders on record November 6, meaning the ex-div date is November 4th. For this position I decided to sell a December call as it would result in a better return if the stock was actually called at the ex-dividend date. It addionally provided added downside protection due to the longer time value. The profit/loss info is below:

10/21/2009 -- Bought 100 INTC @ 19.795
10/21/2009 -- Sold To Open 1 INTC December $19 Call @ 1.14

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: $1755.00

Potential Annualized Gain If Called At Ex-Div. Date (11/4/2009): 40.48%

Potential Annualized Gain If Called At Expiration (11/21/2009): 15.75%

Downside Protection: 5.8%

Initial Transaction - MEMC Electronics Materials (WFR) (10/21/2009)

After a drop in the price of MEMC Electronics Materials, I decided to re-enter a position I had held a few months ago. I have been keeping track of companies which used to be part of the CCIP in order to re-enter positions if the price fell below the original position I had held, but the company still had strong fundamentals. This company is a bit different for the CCIP as it is more of a speculative position, though I think it is necessary to have such things in any portfolio. The company makes silicon wafers for the semiconductor and solar industry, and has had some issues recently with production problems. As a result of that, and the faltering economy, the company has reported negative earnings for the past few quarters. I think the company will be a good growth story coming out of the recession, and I therefore decided to re-establish a position. The profit/loss info is below:

10/21/2009 -- Bought 100 WFR @ 15.76
10/21/2009 -- Sold To Open 1 WFR November $16 Call @ .81

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: 1495.00

Potential Gain If Called At Expiration: 6.25%
PotentialAnnualized Gain If Called At Expiration: 73.59%

Initial Transaction - Microchip Technology (MCHP) (10/20/2009)

This position is another in my ex-dividend strategy, which involves creating an ITM covered call position in a company which has an ex-dividend date prior to the expiration date of the option. Microchip Technology is a company which develops and manufactured specialized products for the semiconductor industry. The company has a profit margin of 24% which is much higher than peers, and yields a giant 5.66% which is amazing for a tech company. The company also reported earnings ahead of expectations in August, and based on recent earnings reports from other semiconductor companies, I expect MCHP to report good earnings in November. The company has not yet declared its dividend, but it should be paid in the second week of November based on historical payments. The profit/loss info is below:

10/20/2009 -- Bought 100 MCHP @ 26.14
10/20/2009 -- Sold To Open 1 MCHP November $25 Call @ 1.54

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: 2460.00

Potential Gain If Called At Ex-Div Date: 1.4%
Potential Annualized Gain If Called At Ex-Div Date: 22.22%

Potential Gain If Called At Expiration: 3.00%
PotentialAnnualized Gain If Called At Expiration: 34.27%