Initial Transaction - Life Partners Holdings Inc. (LPHI) (8/31/2009)

This is a new position in the Covered Call Investor's Portfolio. I found this particular stock by doing a scan for stocks which are trading within 30% of their 52-week lows. I then reviewed the stocks which passed this filter for those with greater than 3% dividends. This resulted in about 100 stocks to consider. When I look for a stock to place in the covered call position, I normally want something which is not trading at the high end of its range, because any pullback in the market could result in a drastic pullback in the stock itself. Life Partners Inc., was one of the few stocks which met this requirement. The stock also sports an above average dividend yield of 5%. LPHI is essentially a type of investment fund for wealthy individuals. They purchase life insurance policies in the secondary market for wealthy individuals who continue to pay the premiums and then collect the funds when the underwritten individual passes. This is a relatively morbid business, but it is also one which I believe will perform well in the economic climate. The company has no debt, and is growing rapidly, as such I believe it will be a good addition to the CCIP. I considered selling a $14.50 strike put originally but the premiums had dropped by about 25% over the weekend and so I decided to go with the $17.50 CC instead. The profit/loss info is below:

8/31/2009 -- Bought 100 LPHI @ 17.48
8/31/2009 -- Sold To Open 1 LPHI October $17/50 Call @ 1.51

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: $1597.00

Downside Protection: 8.6%

Potential Gain If Called At Expiration: 7.04%

PotentialAnnualized Gain If Called At Expiration: 54.65%