Saturday, October 25, 2008

The Brainwashing of the American Investor

As I previously stated, I'm currently reading The Brainwashing of the American Investor by Steven Selengut. While I don't necessarily agree with all of his Wall Street conspiracy theories, I do agree with his investment principles and working capital model, which is quite similar to the way I currently track my covered call portfolio.

I'll be making some minor changes based on this book, especially in the area of performance tracking and reporting. One change I already made was to change my asset allocation to include a fixed income component.

Anyway, here are a few thoughts from the book which I agree with:

- Portfolio management is the effort to achieve personal goals and objectives using a stable strategy.

- The only valid performance analysis is one that compares your personal results with your own personally stated goals and objectives.

- Monitoring investment performance the Wall Street way (e.g. market value) is inappropriate and problematic for goal-oriented investors.

- Ultimately, the income generated by your assets is more important than their current market value.

- The classic long-term goal of an investment program is to live off the income produced by assets, without ever having to invade principal.

- The three big investment principles are quality, diversification, and income generation.

- In the long run, the inherent quality of the securities we buy will be the primary determinant of how successful our investment program becomes.

- A diversified portfolio will have no more than 5% of its assets in any one individual security.

- Never discount the importance of cash flow. Cash pays the bills, particularly at retirement.

- The three basic objectives are, growth of base income, profit production from trading, and overall growth in working capital. Market value, while monitored, does not play a role in meeting any of these objectives.

In future posts, I'll explain the changes I'm making to the performance tracking and reporting. This will take some time to setup, but I hope to have it complete by either Nov or Dec options expiration.

Thursday, October 23, 2008

TIP - New Position

A new dividend position was established today on TIP. The following is the trade information, including IB commissions:

23-Oct-08 - Initial Stock Position - BTO 100 TIP @ 97.24
23-Oct-08 - Initial Call Option - STO 1 Nov08 98.00 Call @ 0.84
03-Nov-08 - Dividend Received - DIV 100 Dividend @ 0.80 - Approx.

Summary without the dividend if called early on Ex-Dividend date:

Stock Investment: $9,724.00
Income Generated: $84.00
Percent Income Generated: 0.86%
Annualized Income Generated: 28.66%
Net Profit If Called: $160.00
Percent Return If Called: 1.65%
Annualized Return If Called: 54.60%
Days Held to Ex-Dividend Date: 11 days

Summary with the dividend if called at option expiration:

Stock Investment: $9,724.00
Income Generated: $164.00
Percent Income Generated: 1.69%
Annualized Income Generated: 21.23%
Net Profit If Called: $240.00
Percent Return If Called: 2.47%
Annualized Return If Called: 31.06%
Days Held to Expiration: 29 days

Dividend Information:

Ex-Dividend Date: 11/03/08 approx.
Dividend Pay Date: 11/05/08 approx.
Dividend Rate: $9.60 approx.
Dividend Yield on Cost: 9.87% approx.

Asset Allocation Change

I'm currently reading The Brainwashing of the American Investorby Steven Selengut. In the book he recommends using two asset classes: fixed income and equities, in a proportion suitable for your personal situation. He also recommends basing the asset allocation on a working capital model, where working capital is defined as the total cost basis of the securities and cash in an investment portfolio. Working capital is increased by dividends, interest, realized capital gains, and deposits. Working capital is decreased by realized capital losses and withdrawals.

Currently, my covered call portfolio uses two asset classes based on working capital: 10-20% cash and 80-90% equities. After reading the book, I've decide to change my asset allocation into three asset classes: 10% cash, 10% fixed income, and 80% equities.

For the fixed income portion, I've decided to use TIP, an ETF that tracks the Lehman Brothers U.S. TIPS (Treasury Inflation Protection Securities) Index. TIP pays a monthly dividend, currently yielding over 9%. Options are also available for TIP, so I plan to sell OTM covered calls in addition to collecting the dividends. The goal is to slowly accumulate shares in TIP up to 20% of working capital. This should provide a fairly stable source of income.

For the equity portion, I'll stick with my current strategy of investing in dividend paying companies selling at a discount to intrinsic value, and selling covered calls.

The cash portion will be reserved for making any necessary adjustments to the covered call positions in both the fixed income and equity positions.

Hopefully, this change in asset allocation will provide some additional stability to the monthly income generated by this portfolio.

Monday, October 20, 2008

WGO - Adjustment

The following adjustment was made today on WGO:

20-Oct-08 - Interim Trade - STO 2 Dec08 10.00 Call @ 0.15 -

Current Position Summary:

Stock Investment: $6,455.00
Income Generated: $1,730.10
Percent Income Generated: 26.80%
Annualized Income Generated: 7.83%
Net Profit If Called: -$2,724.90
Percent Return If Called: -42.21%
Annualized Return If Called: -12.34%
Days Held to Expiration: 1249 days

Trade History:

19-Jul-05 - Initial Stock Position - BTO 100 WGO @ 34.92 -
19-Jul-05 - Initial Call Option - STO 1 Aug05 35.00 Call @ 1.09 - Expired
22-Aug-05 - Continued Trade - STO 1 Sep05 35.00 Call @ 0.44 - Closed
01-Sep-05 - Buy Back & Roll Out - BTC 1 Sep05 35.00 Call @ -0.06 -
19-Sep-05 - Continued Trade - STO 1 Nov05 35.00 Call @ 0.34 - Closed
03-Oct-05 - Dividend Received - DIV 100 Dividend @ 0.09 -
21-Oct-05 - Buy Back & Roll Down - BTC 1 Nov05 35.00 Call @ -0.06 -
24-Oct-05 - Interim Trade - STO 1 Nov05 30.00 Call @ 0.24 - Closed
14-Nov-05 - Buy Back & Roll Up - BTC 1 Nov05 30.00 Call @ -2.66 -
21-Nov-05 - Continued Trade - STO 1 Jan06 35.00 Call @ 0.99 - Expired
09-Jan-06 - Dividend Received - DIV 100 Dividend @ 0.09 -
23-Jan-06 - Continued Trade - STO 1 Mar06 35.00 Call @ 0.44 - Expired
20-Mar-06 - Dollar Cost Averaging - BTO 100 WGO @ 29.63 -
20-Mar-06 - Combined Cost Basis - $6,455.00 200 @ 32.28 -
20-Mar-06 - Continued Trade - STO 2 Jul05 35.00 Call @ 0.69 - Expired
03-Apr-06 - Dividend Received - DIV 100 Dividend @ 0.09 -
10-Jul-06 - Dividend Received - DIV 200 Dividend @ 0.09 -
24-Jul-06 - Continued Trade - STO 2 Jan07 35.00 Call @ 1.39 - Closed
09-Oct-06 - Dividend Received - DIV 200 Dividend @ 0.10 -
22-Dec-06 - Buy Back & Roll Out - BTC 2 Jan07 35.00 Call @ -0.16 -
22-Dec-06 - Continued Trade - STO 2 Apr07 35.00 Call @ 1.19 - Expired
08-Jan-07 - Dividend Received - DIV 200 Dividend @ 0.10 -
09-Apr-07 - Dividend Received - DIV 200 Dividend @ 0.10 -
23-Apr-07 - Continued Trade - STO 2 May07 35.00 Call @ 0.54 - Expired
21-May-07 - Continued Trade - STO 2 Jun07 35.00 Call @ 0.09 - Expired
19-Jun-07 - Continued Trade - STO 2 Jan08 35.00 Call @ 0.94 - Expired
09-Jul-07 - Dividend Received - DIV 200 Dividend @ 0.10 -
08-Oct-07 - Dividend Received - DIV 200 Dividend @ 0.12 -
24-Jan-08 - Interim Trade - STO 2 Feb08 22.50 Call @ 0.44 - Expired
21-Feb-08 - Interim Trade - STO 2 Apr08 22.50 Call @ 0.79 - Expired
07-Apr-08 - Dividend Received - DIV 200 Dividend @ 0.12 -
23-Apr-08 - Interim Trade - STO 2 Jul08 17.50 Call @ 0.49 - Expired
08-Jul-08 - Dividend Received - DIV 200 Dividend @ 0.12 -
22-Jul-08 - Interim Trade - STO 2 Sep08 15.00 Call @ 0.40 - Closed
12-Sep-08 - Buy Back & Roll Out - BTC 2 Sep08 15.00 Call @ -0.06 -
12-Sep-08 - Interim Trade - STO 2 Oct08 15.00 Call @ 0.23 - Expired
06-Oct-08 - Dividend Received - DIV 200 Dividend @ 0.12 -
20-Oct-08 - Interim Trade - STO 2 Dec08 10.00 Call @ 0.15 -

WFMI - Adjustment

The following adjustment was made today on WFMI:

20-Oct-08 - Interim Trade - STO 2 Nov08 17.00 Call @ 0.44 -

Current Position Summary:

Stock Investment: $8,563.00
Income Generated: $1,800.80
Percent Income Generated: 21.03%
Annualized Income Generated: 13.28%
Net Profit If Called: -$3,362.20
Percent Return If Called: -39.26%
Annualized Return If Called: -24.79%
Days Held to Expiration: 578 days

Trade History:

23-Apr-07 - Initial Stock Position - BTO 100 WFMI @ 47.19 - VICC
23-Apr-07 - Initial Call Option - STO 1 May07 50.00 Call @ 0.83 - Expired
21-May-07 - Interim Trade - STO 1 Jul07 45.00 Call @ 0.24 - Closed
21-Jun-07 - Buy Back and Roll Out - BTC 1 Jul07 45.00 Call @ -0.03 -
21-Jun-07 - Dollar Cost Averaging - BTO 100 WFMI @ 38.44 -
21-Jun-07 - Combined Cost Basis - $8,563.00 200 @ 42.82 -
21-Jun-07 - Continued Trade - STO 2 Aug07 45.00 Call @ 0.29 - Expired
24-Jul-07 - Dividend Received - DIV 200 Dividend @ 0.18 -
20-Aug-07 - Continued Trade - STO 2 Sep07 50.00 Call @ 0.20 - Expired
24-Sep-07 - Continued Trade - STO 2 Oct07 50.00 Call @ 0.16 - Expired
22-Oct-07 - Continued Trade - STO 2 Dec07 50.00 Call @ 2.64 - Expired
14-Jan-08 - Continued Trade - STO 2 May08 45.00 Call @ 1.45 - Closed
22-Jan-08 - Dividend Received - DIV 200 Dividend @ 0.20 -
22-Apr-08 - Dividend Received - DIV 200 Dividend @ 0.20 -
28-Apr-08 - Buy Back & Roll Down - BTC 2 May08 45.00 Call @ -0.06 -
28-Apr-08 - Interim Trade - STO 2 May08 34.00 Call @ 0.53 - Expired
22-May-08 - Interim Trade - STO 2 Jul08 31.00 Call @ 0.54 - Expired
22-Jul-08 - Interim Trade - STO 2 Aug08 24.00 Call @ 0.89 - Expired
22-Aug-08 - Interim Trade - STO 2 Oct08 21.00 Call @ 0.43 - Expired
20-Oct-08 - Interim Trade - STO 2 Nov08 17.00 Call @ 0.44 -

UTX - Adjustment

The following adjustment was made today on UTX:

20-Oct-08 - Interim Trade - STO 1 Nov08 60.00 Call @ 0.39 -

Current Position Summary:

Stock Investment: $7,524.00
Income Generated: $464.00
Percent Income Generated: 6.17%
Annualized Income Generated: 11.09%
Net Profit If Called: -$1,060.00
Percent Return If Called: -14.92%
Annualized Return If Called: -25.33%
Days Held to Expiration: 203 days

Trade History:

02-May-08 - Initial Stock Position - BTO 100 UTX @ 75.24 -
02-May-08 - Initial Call Option - STO 1 Jun08 75.00 Call @ 2.37 - Expired
10-Jun-08 - Dividend Received - DIV 100 Dividend @ 0.32 -
07-Jul-08 - Interim Trade - STO 1 Aug08 70.00 Call @ 0.26 - Expired
22-Aug-08 - Interim Trade - STO 1 Sep08 70.00 Call @ 0.35 - Closed
10-Sep-08 - Dividend Received - DIV 100 Dividend @ 0.32 -
12-Sep-08 - Buy Back & Roll Out - BTC 1 Sep08 70.00 Call @ -0.06 -
12-Sep-08 - Interim Trade - STO 1 Oct08 70.00 Call @ 0.69 - Expired
20-Oct-08 - Interim Trade - STO 1 Nov08 60.00 Call @ 0.39 -

TGT - Adjustment

The following adjustment was made today on TGT:

20-Oct-08 - Interim Trade - STO 1 Nov08 45.00 Call @ 1.18 -

Current Position Summary:

Stock Investment: $5,937.00
Income Generated: $1,024.60
Percent Income Generated: 17.26%
Annualized Income Generated: 17.55%
Net Profit If Called: -$1,412.40
Percent Return If Called: -23.79%
Annualized Return If Called: -24.19%
Days Held to Expiration: 359 days

Trade History:

28-Nov-07 - Initial Stock Position - BTO 100 TGT @ 59.37 -
28-Nov-07 - Initial Call Option - STO 1 Dec07 55.00 Call @ 5.66 - Expired
07-Jan-08 - Continued Trade - STO 1 Feb07 55.00 Call @ 0.84 - Expired
21-Feb-08 - Continued Trade - STO 1 Mar08 55.00 Call @ 1.44 - Expired
10-Mar-08 - Dividend Received - DIV 100 Dividend @ 0.14 -
25-Mar-08 - Continued Trade - STO 1 Apr08 55.00 Call @ 1.31 - Expired
23-Apr-08 - Interim Trade - STO 1 May08 55.00 Call @ 0.62 - Closed
16-May-08 - Buy Back & Roll Out/Up - BTC 1 May08 55.00 Call @ -0.11 -
19-May-08 - Continued Trade - STO 1 Jun08 57.50 Call @ 1.21 - Expired
10-Jun-08 - Dividend Received - DIV 100 Dividend @ 0.14 -
07-Jul-08 - Continued Trade - STO 1 Jul08 50.00 Call @ 0.58 - Expired
22-Jul-08 - Continued Trade - STO 1 Sep08 50.00 Call @ 1.25 - Closed
10-Sep-08 - Dividend Received - DIV 100 Dividend @ 0.16 -
12-Sep-08 - Buy Back & Roll Out/Up - BTC 1 Sep08 50.00 Call @ -6.80 -
12-Sep-08 - Continued Trade - STO 1 Oct08 57.50 Call @ 2.62 - Expired
20-Oct-08 - Interim Trade - STO 1 Nov08 45.00 Call @ 1.18 -

SNDK - Adjustment

The following adjustments were made today on SNDK:

20-Oct-08 - Interim Trade - STO 2 Nov08 18.00 Call @ 1.16 -

NOTE: Two SNDK positions were combined into one.

Current Position Summary:

Stock Investment: $10,854.00
Income Generated: $3,933.40
Percent Income Generated: 36.24%
Annualized Income Generated: 14.04%
Net Profit If Called: -$3,320.60
Percent Return If Called: -30.59%
Annualized Return If Called: -11.85%
Days Held to Expiration: 942 days

Trade History:

24-Apr-06 - Initial Stock Position - BTO 100 SNDK @ 59.56 -
24-Apr-06 - Initial Call Option - STO 1 Jul06 57.50 Call @ 7.09 - Closed
06-Jul-06 - Buy Back & Roll Out/Down - BTC 1 Jul06 57.50 Call @ -0.16 -
06-Jul-06 - Second Stock Position - BTO 100 SNDK @ 48.98 -
06-Jul-06 - Combined Cost Basis - $10,854.00 200 @ 54.27 -
06-Jul-06 - Continued Trade - STO 2 Oct06 55.00 Call @ 3.39 - Expired
23-Oct-06 - Continued Trade - STO 2 Jan07 55.00 Call @ 2.14 - Closed
19-Dec-06 - Buy Back & Roll Out/Down - BTC 2 Jan07 55.00 Call @ -0.16 -
19-Dec-06 - Continued Trade - STO 2 Feb07 50.00 Call @ 1.69 - Closed
06-Feb-07 - Buy Back & Roll Out/Down - BTC 2 Feb07 50.00 Call @ -0.06 -
06-Feb-07 - Interim Trade - STO 2 Apr07 45.00 Call @ 1.39 - Expired
27-Apr-07 - Interim Trade - STO 2 May07 45.00 Call @ 0.84 - Expired
21-May-07 - Interim Trade - STO 2 Jun07 45.00 Call @ 0.98 - Closed
15-Jun-07 - Buy Back & Roll Out/Up - BTC 2 Jun07 45.00 Call @ -1.46 -
15-Jun-07 - Continued Trade - STO 2 Oct07 50.00 Call @ 2.60 - Expired
22-Oct-07 - Continued Trade - STO 2 Nov07 45.00 Call @ 1.64 - Expired
20-Nov-07 - Continued Trade - STO 2 Dec07 40.00 Call @ 0.67 - Expired
14-Jan-08 - Interim Trade - STO 2 Feb08 35.00 Call @ 0.85 - Expired
21-Feb-08 - Interim Trade - STO 2 Mar08 30.00 Call @ 0.24 - Expired
25-Mar-08 - Interim Trade - STO 2 May08 25.00 Call @ 0.74 - Expired
29-Apr-08 - Buy Back & Roll Out/Up - BTC 2 May08 25.00 Call @ -2.35 -
29-Apr-08 - Interim Trade - STO 2 Jul08 30.00 Call @ 1.38 - Expired
24-Jul-08 - Interim Trade - STO 1 Oct08 20.00 Call @ 0.31 - Expired
24-Jul-08 - Interim Trade - STO 1 Oct08 17.50 Call @ 0.65 - Expired
20-Oct-08 - Interim Trade - STO 2 Nov08 18.00 Call @ 1.16 -

PLCM - Adjustment

The following adjustment was made today on PLCM:

20-Oct-08 - Interim Trade - STO 1 Nov08 25.00 Call @ 0.23 -

Current Position Summary:

Stock Investment: $3,164.00
Income Generated: $699.00
Percent Income Generated: 22.09%
Annualized Income Generated: 17.57%
Net Profit If Called: $35.00
Percent Return If Called: 1.11%
Annualized Return If Called: 0.88%
Days Held to Expiration: 459 days

Trade History:

20-Aug-07 - Initial Stock Position - BTO 100 PLCM @ 31.64 -
20-Aug-07 - Initial Call Option - STO 1 Sep07 30.00 Call @ 2.55 - Expired
24-Sep-07 - Continued Trade - STO 1 Oct07 30.00 Call @ 0.34 - Expired
22-Oct-07 - Continued Trade - STO 1 Nov07 30.00 Call @ 0.79 - Expired
20-Nov-07 - Continued Trade - STO 1 Dec07 30.00 Call @ 0.27 - Expired
14-Jan-08 - Interim Trade - STO 1 Feb08 25.00 Call @ 0.78 - Expired
21-Feb-08 - Interim Trade - STO 1 Mar08 25.00 Call @ 0.29 - Expired
25-Mar-08 - Interim Trade - STO 1 May08 25.00 Call @ 0.73 - Closed
16-May-08 - Buy Back & Roll Out/Up - BTC 1 May08 25.00 Call @ -0.06 -
19-May-08 - Continued Trade - STO 1 Jul08 30.00 Call @ 0.24 - Expired
22-Jul-08 - Interim Trade - STO 1 Oct08 25.00 Call @ 0.83 - Expired
20-Oct-08 - Interim Trade - STO 1 Nov08 25.00 Call @ 0.23 -

PFCB - Adjustment

The following adjustment was made today on PFCB:

20-Oct-08 - Interim Trade - STO 1 Nov08 22.50 Call @ 0.34 -

Current Position Summary:

Stock Investment: $3,578.00
Income Generated: $613.00
Percent Income Generated: 17.13%
Annualized Income Generated: 13.62%
Net Profit If Called: -$715.00
Percent Return If Called: -19.98%
Annualized Return If Called: -15.89%
Days Held to Expiration: 459 days

Trade History:

20-Aug-07 - Initial Stock Position - BTO 100 PFCB @ 35.78 -
20-Aug-07 - Initial Call Option - STO 1 Sep07 35.00 Call @ 2.30 - Expired
24-Sep-07 - Continued Trade - STO 1 Oct07 35.00 Call @ 0.39 - Expired
25-Oct-07 - Continued Trade - STO 1 Jan08 35.00 Call @ 0.22 - Expired
24-Jan-08 - Interim Trade - STO 1 Feb08 30.00 Call @ 0.65 - Expired
21-Feb-08 - Interim Trade - STO 1 Mar08 30.00 Call @ 0.74 - Expired
25-Mar-08 - Continued Trade - STO 1 Apr08 35.00 Call @ 0.34 - Expired
24-Apr-08 - Continued Trade - STO 1 Jun08 35.00 Call @ 0.49 - Expired
24-Jul-08 - Interim Trade - STO 1 Sep08 30.00 Call @ 0.63 - Closed
12-Sep-08 - Buy Back & Roll Out - BTC 1 Sep08 30.00 Call @ -0.06 -
12-Sep-08 - Interim Trade - STO 1 Oct08 30.00 Call @ 0.09 - Expired
20-Oct-08 - Interim Trade - STO 1 Nov08 22.50 Call @ 0.34 -

MHP - Adjustment

The following adjustment was made today on MHP:

20-Oct-08 - Buy Back and Roll Down - BTC 1 Nov08 45.00 Call @ -0.21 - Closed
20-Oct-08 - Interim Trade - STO 1 Nov08 35.00 Call @ 0.29 -

Current Position Summary:

Stock Investment: $4,527.00
Income Generated: $380.00
Percent Income Generated: 8.39%
Annualized Income Generated: 16.47%
Net Profit If Called: -$647.00
Percent Return If Called: -14.92%
Annualized Return If Called: -28.05%
Days Held to Expiration: 186 days

Trade History:

19-May-08 - Initial Stock Position - BTO 100 MHP @ 45.27 -
19-May-08 - Initial Call Option - STO 1 Jun08 45.00 Call @ 1.64 - Expired
11-Jun-08 - Dividend Received - DIV 100 Dividend @ 0.22 -
07-Jul-08 - Continued Trade - STO 1 Aug08 45.00 Call @ 0.34 - Expired
22-Aug-08 - Continued Trade - STO 1 Sep08 45.00 Call @ 0.51 - Expired
10-Sep-08 - Dividend Received - DIV 100 Dividend @ 0.22 -
23-Sep-08 - Continued Trade - STO 1 Nov08 45.00 Call @ 0.79 - Closed
20-Oct-08 - Buy Back and Roll Down - BTC 1 Nov08 45.00 Call @ -0.21 - Closed
20-Oct-08 - Interim Trade - STO 1 Nov08 35.00 Call @ 0.29 -

MCO - Adjustment

The following adjustments were made today on MCO:

20-Oct-08 - Interim Trade - STO 2 Nov08 30.00 Call @ 0.56 -

NOTE: Two MCO positions were combined into one.

Current Position Summary:

Stock Investment: $10,649.00
Income Generated: $1,901.80
Percent Income Generated: 17.86%
Annualized Income Generated: 12.73%
Net Profit If Called: -$2,747.20
Percent Return If Called: -25.80%
Annualized Return If Called: -18.39%
Days Held to Expiration: 512 days

Trade History:

28-Jun-07 - Initial Stock Position - BTO 100 MCO @ 62.41 -
28-Jun-07 - Initial Call Option - STO 1 Jul07 60.00 Call @ 3.49 - Expired
25-Jul-07 - Continued Trade - STO 1 Aug07 60.00 Call @ 1.54 - Expired
20-Aug-07 - Interim Trade - STO 1 Sep07 55.00 Call @ 0.89 - Expired
10-Sep-07 - Dividend Received - DIV 100 Dividend @ 0.08 -
24-Sep-07 - Interim Trade - STO 1 Oct07 55.00 Call @ 0.24 - Expired
25-Oct-07 - Second Stock Position - BTO 100 MCO @ 44.08 -
25-Oct-07 - Combined Cost Basis - $10,649.00 200 @ 53.25 -
25-Oct-07 - Continued Trade - STO 2 Dec07 55.00 Call @ 0.29 - Expired
10-Dec-07 - Dividend Received - DIV 200 Dividend @ 0.08 -
24-Jan-08 - Interim Trade - STO 2 Feb08 40.00 Call @ 0.89 - Expired
21-Feb-08 - Interim Trade - STO 2 Mar08 45.00 Call @ 0.24 - Expired
10-Mar-08 - Dividend Received - DIV 200 Dividend @ 0.10 -
25-Mar-08 - Interim Trade - STO 2 May08 45.00 Call @ 0.54 - Expired
16-May-08 - Buy Back & Roll Out/Up - BTC 2 May08 45.00 Call @ -0.11 -
22-May-08 - Interim Trade - STO 2 Jul08 40.00 Call @ 0.94 - Expired
10-Jun-08 - Dividend Received - DIV 200 Dividend @ 0.10 -
30-Jul-08 - Interim Trade - STO 1 Aug08 40.00 Call @ 0.54 - Closed
30-Jul-08 - Interim Trade - STO 1 Sep08 40.00 Call @ 1.04 - Closed
15-Aug-08 - Buy Back and Roll Out - BTC 1 Aug08 40.00 Call @ -0.26 -
15-Aug-08 - Interim Trade - STO 1 Sep08 40.00 Call @ 2.00 - Closed
10-Sep-08 - Dividend Received - DIV 200 Dividend @ 0.10 -
12-Sep-08 - Buy Back & Roll Out - BTC 2 Sep08 40.00 Call @ -0.71 -
12-Sep-08 - Interim Trade - STO 2 Oct08 40.00 Call @ 1.69 - Expired
20-Oct-08 - Interim Trade - STO 2 Nov08 30.00 Call @ 0.56 -

LM - Adjustment

The following adjustment was made today on LM:

20-Oct-08 - Interim Trade - STO 1 Nov08 25.00 Call @ 1.59 -

Current Position Summary:

Stock Investment: $9,109.00
Income Generated: $1,669.00
Percent Income Generated: 18.32%
Annualized Income Generated: 13.85%
Net Profit If Called: -$4,940.00
Percent Return If Called: -54.23%
Annualized Return If Called: -40.98%
Days Held to Expiration: 483 days

Trade History:

27-Jul-07 - Initial Stock Position - BTO 100 LM @ 91.09 -
27-Jul-07 - Initial Call Option - STO 1 Aug07 90.00 Call @ 3.49 - Expired
20-Aug-07 - Continued Trade - STO 1 Sep07 90.00 Call @ 2.09 - Expired
24-Sep-07 - Continued Trade - STO 1 Oct07 90.00 Call @ 0.47 - Expired
15-Oct-07 - Dividend Received - DIV 100 Dividend @ 0.24 -
25-Oct-07 - Continued Trade - STO 1 Dec07 85.00 Call @ 2.09 - Expired
31-Dec-07 - Dividend Received - DIV 100 Dividend @ 0.24 -
07-Jan-08 - Interim Trade - STO 1 Feb08 80.00 Call @ 0.97 - Expired
21-Feb-08 - Interim Trade - STO 1 Mar08 75.00 Call @ 0.64 - Expired
25-Mar-08 - Interim Trade - STO 1 Apr08 65.00 Call @ 0.68 - Expired
07-Apr-08 - Dividend Received - DIV 100 Dividend @ 0.24 -
23-Apr-08 - Interim Trade - STO 1 May08 65.00 Call @ 0.39 - Expired
22-May-08 - Interim Trade - STO 1 Jul08 60.00 Call @ 0.82 - Expired
07-Jul-08 - Dividend Received - DIV 100 Dividend @ 0.24 -
29-Jul-08 - Interim Trade - STO 1 Sep08 45.00 Call @ 1.40 - Closed
12-Sep-08 - Buy Back & Roll Out - BTC 1 Sep08 45.00 Call @ -0.40 -
12-Sep-08 - Interim Trade - STO 1 Oct08 45.00 Call @ 1.50 - Expired
20-Oct-08 - Interim Trade - STO 1 Nov08 25.00 Call @ 1.59 -

LLY - Adjustment

The following adjustment was made today on LLY:

20-Oct-08 - Interim Trade - STO 1 Nov08 40.00 Call @ 0.19 -

Current Position Summary:

Stock Investment: $4,971.00
Income Generated: $343.00
Percent Income Generated: 6.90%
Annualized Income Generated: 12.41%
Net Profit If Called: -$628.00
Percent Return If Called: -12.63%
Annualized Return If Called: -22.71%
Days Held to Expiration: 203 days

Trade History:

02-May-08 - Initial Stock Position - BTO 100 LLY @ 49.71 -
02-May-08 - Initial Call Option - STO 1 Jun08 50.00 Call @ 1.29 - Expired
10-Jun-08 - Dividend Received - DIV 100 Dividend @ 0.47 -
07-Jul-08 - Continued Trade - STO 1 Aug08 50.00 Call @ 0.29 - Expired
22-Aug-08 - Continued Trade - STO 1 Sep08 50.00 Call @ 0.32 - Expired
10-Sep-08 - Dividend Received - DIV 100 Dividend @ 0.47 -
23-Sep-08 - Continued Trade - STO 1 Oct08 50.00 Call @ 0.40 - Expired
20-Oct-08 - Interim Trade - STO 1 Nov08 40.00 Call @ 0.19 -

KO - Adjustment

The following adjustment was made today on KO:

20-Oct-08 - Interim Trade - STO 1 Nov08 50.00 Call @ 0.79 -

Current Position Summary:

Stock Investment: $5,022.00
Income Generated: $238.00
Percent Income Generated: 4.74%
Annualized Income Generated: 29.82%
Net Profit If Called: $216.00
Percent Return If Called: 4.30%
Annualized Return If Called: 27.07%
Days Held to Expiration: 58 days

Trade History:

24-Sep-08 - Initial Stock Position - BTO 100 KO @ 50.22 -
24-Sep-08 - Initial Call Option - STO 1 Oct08 50.00 Call @ 1.59 - Expired
20-Oct-08 - Interim Trade - STO 1 Nov08 50.00 Call @ 0.79 -

GE - Adjustment

The following adjustment was made today on GE:

20-Oct-08 - Interim Trade - STO 1 Nov08 22.00 Call @ 0.34 -

Current Position Summary:

Stock Investment: $2,501.00
Income Generated: $213.00
Percent Income Generated: 8.52%
Annualized Income Generated: 52.69%
Net Profit If Called: -$88.00
Percent Return If Called: -3.52%
Annualized Return If Called: -21.77%
Days Held to Expiration: 59 days

Trade History:

23-Sep-08 - Initial Stock Position - BTO 100 GE @ 25.01 -
23-Sep-08 - Initial Call Option - STO 1 Oct08 25.00 Call @ 1.79 - Expired
20-Oct-08 - Interim Trade - STO 1 Nov08 22.00 Call @ 0.34 -

FTEK - Adjustment

The following adjustment was made today on FTEK:

20-Oct-08 - Interim Trade - STO 1 Nov08 17.50 Call @ 0.49 -

Current Position Summary:

Stock Investment: $2,839.00
Income Generated: $319.00
Percent Income Generated: 11.24%
Annualized Income Generated: 7.87%
Net Profit If Called: -$770.00
Percent Return If Called: -27.12%
Annualized Return If Called: -19.00%
Days Held to Expiration: 521 days

Trade History:

19-Jun-07 - Initial Stock Position - BTO 100 FTEK @ 28.39 -
19-Jun-07 - Initial Call Option - STO 1 Dec07 30.00 Call @ 3.29 - Expired
07-Jan-08 - Continued Trade - STO 1 Feb08 25.00 Call @ 0.34 - Expired
21-Feb-08 - Interim Trade - STO 1 Mar08 22.50 Call @ 0.44 - Expired
25-Mar-08 - Interim Trade - STO 1 May08 22.50 Call @ 0.74 - Closed
29-Apr-08 - Buy Back & Roll Out/Up - BTC 1 May08 22.50 Call @ -3.91 -
29-Apr-08 - Continued Trade - STO 1 Jun08 30.00 Call @ 0.69 - Expired
07-Jul-08 - Interim Trade - STO 1 Aug08 22.50 Call @ 0.39 - Expired
22-Aug-08 - Interim Trade - STO 1 Sep08 22.50 Call @ 0.64 - Closed
12-Sep-08 - Buy Back & Roll Out - BTC 1 Sep08 22.50 Call @ -0.16 -
12-Sep-08 - Interim Trade - STO 1 Oct08 22.50 Call @ 0.24 - Expired
20-Oct-08 - Interim Trade - STO 1 Nov08 17.50 Call @ 0.49 -

EXP - Adjustment

The following adjustments were made today on EXP:

20-Oct-08 - Interim Trade - STO 2 Nov08 20.00 Call @ 0.64 -

NOTE: Two EXP positions were combined into one.

Current Position Summary:

Stock Investment: $10,856.00
Income Generated: $2,494.75
Percent Income Generated: 22.98%
Annualized Income Generated: 8.90%
Net Profit If Called: -$4,361.25
Percent Return If Called: -40.17%
Annualized Return If Called: -15.57%
Days to Expiration: 942 days

Trade History:

24-Apr-06 - Initial Stock Position - BTO 100 EXP @ 70.60 -
24-Apr-06 - Initial Call Option - STO 1 May06 65.00 Call @ 8.29 - Expired
22-May-06 - Continued Trade - STO 1 Oct06 60.00 Call @ 2.39 -
20-Jul-06 - Dividend Received - DIV 100 Dividend @ 0.18 -
25-Jul-06 - Interim Trade - STO 1 Jan07 50.00 Call @ 2.19 - Closed
25-Jul-06 - Buy Back & Roll Out/Down - BTC 1 Oct06 60.00 Call @ -0.21 - Closed
23-Oct-06 - Interim Trade - STO 1 Jan07 40.00 Call @ 1.34 - Closed
23-Oct-06 - Buy Back & Roll Down - BTC 1 Jan07 50.00 Call @ -0.26 -
02-Nov-06 - Dividend Received - DIV 100 Dividend @ 0.18 -
19-Dec-06 - Buy Back & Roll Out/Up - BTC 1 Jan07 40.00 Call @ -3.41 -
19-Dec-06 - Interim Trade - STO 1 Jul07 45.00 Call @ 4.39 - Closed
05-Jul-07 - Interim Trade - STO 1 Jan08 55.00 Call @ 3.29 - Closed
05-Jul-07 - Buy Back & Roll Out/Up - BTC 1 Jul07 45.00 Call @ -5.41 -
20-Jul-07 - Dividend Received - DIV 100 Dividend @ 0.20 -
24-Oct-07 - Buy Back & Roll Down - BTC 1 Jan08 55.00 Call @ -0.16 -
24-Oct-07 - Second Stock Position - BTO 100 EXP @ 37.96 -
24-Oct-07 - Combined Cost Basis - $10,856.00 200 @ 54.28 -
24-Oct-07 - Interim Trade - STO 2 Jan08 45.00 Call @ 0.69 - Expired
05-Nov-07 - Dividend Received - DIV 100 Dividend @ 0.20 -
21-Jan-08 - Dividend Received - DIV 200 Dividend @ 0.20 -
24-Jan-08 - Interim Trade - STO 2 Feb08 35.00 Call @ 1.29 - Expired
21-Feb-08 - Interim Trade - STO 2 Apr08 40.00 Call @ 0.84 - Expired
18-Apr-08 - Dividend Received - DIV 200 Dividend @ 0.20 -
23-Apr-08 - Interim Trade - STO 2 Jul08 40.00 Call @ 0.99 - Expired
22-Jul-08 - Interim Trade - STO 1 Oct08 30.00 Call @ 0.54 - Expired
23-Jul-08 - Interim Trade - STO 1 Sep08 30.00 Call @ 0.34 - Closed
24-Jul-08 - Dividend Received - DIV 200 Dividend @ 0.20 -
12-Sep-08 - Buy Back & Roll Out - BTC 1 Sep08 30.00 Call @ -0.36 -
12-Sep-08 - Interim Trade - STO 1 Oct08 30.00 Call @ 1.09 - Expired
20-Oct-08 - Interim Trade - STO 2 Nov08 20.00 Call @ 0.64 -

DHI - Adjustment

The following adjustments were made today on DHI:

20-Oct-08 - Buy Back and Roll Down - BTC 1 Nov08 17.50 Call @ -0.06 -
20-Oct-08 - Buy Back and Roll Down - BTC 1 Nov08 15.00 Call @ -0.06 -
20-Oct-08 - Interim Trade - STO 3 Dec08 10.00 Call @ 0.24 -

NOTE: Three DHI positions were combined into one.

Current Position Summary:

Stock Investment: $8,777.00
Income Generated: $2,131.75
Percent Income Generated: 24.29%
Annualized Income Generated: 7.17%
Net Profit If Called: -$3,645.25
Percent Return If Called: -41.53%
Annualized Return If Called: -12.26%
Days Held to Expiration: 1236 days

Trade History:

01-Aug-05 - Initial Stock Position - BTO 100 DHI @ 40.18 -
01-Aug-05 - Initial Call Option - STO 1 Aug05 40.00 Call @ 1.29 - Expired
19-Aug-05 - Dividend Received - DIV 100 Dividend @ 0.09 -
22-Aug-05 - Continued Trade - STO 1 Oct05 40.00 Call @ 0.54 - Closed
05-Oct-05 - Buy Back & Roll Out/Down - BTC 1 Oct05 40.00 Call @ -0.11 -
24-Oct-05 - Interim Trade - STO 1 Nov05 35.00 Call @ 0.49 - Closed
31-Oct-05 - Dividend Received - DIV 100 Dividend @ 0.09 -
18-Nov-05 - Buy Back & Roll Out/Up - BTC 1 Nov05 35.00 Call @ -0.31 -
21-Nov-05 - Continued Trade - STO 1 Dec05 40.00 Call @ 0.34 - Expired
09-Jan-06 - Continued Trade - STO 1 Jan06 40.00 Call @ 0.49 - Expired
23-Jan-06 - Continued Trade - STO 1 Feb06 40.00 Call @ 0.69 - Expired
10-Feb-06 - Dividend Received - DIV 100 Dividend @ 0.10 -
21-Feb-06 - Continued Trade - STO 1 Apr06 40.00 Call @ 0.44 - Closed
23-Mar-06 - Buy Back & Roll Out - BTC 1 Apr06 40.00 Call @ -0.11 -
23-Mar-06 - Continued Trade - STO 1 Aug06 40.00 Call @ 0.94 -
19-May-06 - Dividend Received - DIV 100 Dividend @ 0.10 -
23-May-06 - Buy Back & Roll Out/Down - BTC 1 Aug06 40.00 Call @ -0.11 - Closed
23-May-06 - Second Stock Position - BTO 100 DHI @ 26.89 -
23-May-08 - Combined Cost Basis - $6,707.00 200 @ 33.54 -
23-May-06 - Continued Trade - STO 2 Jan07 35.00 Call @ 1.04 -
25-Jul-06 - Buy Back & Roll Down - BTC 2 Jan07 35.00 Call @ -0.16 - Closed
25-Jul-06 - Third Stock Position - BTO 100 DHI @ 20.70 -
25-Jul-06 - Combined Cost Basis - $8,777.00 300 @ 29.26 -
25-Jul-06 - Interim Trade - STO 3 Jan07 25.00 Call @ 0.99 - Closed
01-Nov-06 - Dividend Received - DIV 300 Dividend @ 0.15 -
19-Dec-06 - Buy Back & Roll Up - BTC 3 Jan07 25.00 Call @ -2.36 -
19-Dec-06 - Continued Trade - STO 3 Jan08 30.00 Call @ 2.74 - Expired
09-Feb-07 - Dividend Received - DIV 300 Dividend @ 0.15 -
18-May-07 - Dividend Received - DIV 300 Dividend @ 0.15 -
27-Aug-07 - Dividend Received - DIV 300 Dividend @ 0.15 -
16-Nov-07 - Dividend Received - DIV 300 Dividend @ 0.15 -
24-Jan-08 - Interim Trade - STO 3 Feb08 15.00 Call @ 0.69 - Closed
20-Feb-08 - Dividend Received - DIV 300 Dividend @ 0.15 -
21-Feb-08 - Interim Trade - STO 3 Mar08 17.50 Call @ 0.39 - Expired
25-Mar-08 - Interim Trade - STO 3 May08 20.00 Call @ 0.39 - Expired
22-May-08 - Interim Trade - STO 3 Jul08 17.50 Call @ 0.16 - Expired
29-May-08 - Dividend Received - DIV 300 Dividend @ 0.08 -
22-Jul-08 - Interim Trade - STO 1 Aug08 12.50 Call @ 0.43 - Closed
22-Jul-08 - Interim Trade - STO 1 Sep08 15.00 Call @ 0.27 - Closed
22-Jul-08 - Interim Trade - STO 1 Nov08 17.50 Call @ 0.33 - Closed
15-Aug-08 - Buy Back and Roll Out - BTC 1 Aug08 12.50 Call @ -0.04 -
15-Aug-08 - Interim Trade - STO 1 Sep08 12.50 Call @ 0.77 - Closed
28-Aug-08 - Dividend Received - DIV 300 Dividend @ 0.08 -
12-Sep-08 - Buy Back & Roll Out - BTC 1 Sep08 15.00 Call @ -0.36 -
12-Sep-08 - Buy Back & Roll Out/Up - BTC 1 Sep08 12.50 Call @ -1.86 -
12-Sep-08 - Interim Trade - STO 1 Oct08 15.00 Call @ 0.84 - Expired
12-Sep-08 - Interim Trade - STO 1 Nov08 15.00 Call @ 1.39 - Closed
20-Oct-08 - Buy Back and Roll Down - BTC 1 Nov08 17.50 Call @ -0.06 -
20-Oct-08 - Buy Back and Roll Down - BTC 1 Nov08 15.00 Call @ -0.06 -
20-Oct-08 - Interim Trade - STO 3 Dec08 10.00 Call @ 0.24 -

CNI - Adjustment

The following adjustment was made today on CNI:

20-Oct-08 - Interim Trade - STO 1 Nov08 45.00 Call @ 1.04 -

Current Position Summary:

Stock Investment: $5,201.00
Income Generated: $441.42
Percent Income Generated: 8.49%
Annualized Income Generated: 52.51%
Net Profit If Called: -$259.58
Percent Return If Called: -4.99%
Annualized Return If Called: -30.88%
Days Held to Expiration: 59 days

Trade History:

23-Sep-08 - Initial Stock Position - BTO 100 CNI @ 52.01 -
23-Sep-08 - Initial Call Option - STO 1 Oct08 50.00 Call @ 3.19 - Expired
30-Sep-08 - Dividend Received - DIV 100 Dividend @ 0.22 -
30-Sep-08 - Withholding Tax - TAX 1 CA Tax @ -0.03 -
20-Oct-08 - Interim Trade - STO 1 Nov08 45.00 Call @ 1.04 -

CCL - Adjustment

The following adjustment was made today on CCL:

20-Oct-08 - Interim Trade - STO 2 Nov08 32.50 Call @ 0.99 -

Current Position Summary:

Stock Investment: $8,125.00
Income Generated: $655.20
Percent Income Generated: 8.06%
Annualized Income Generated: 14.50%
Net Profit If Called: -$969.80
Percent Return If Called: -11.94%
Annualized Return If Called: -21.46%
Days Held to Expiration: 203 days

Trade History:

02-May-08 - Initial Stock Position - BTO 100 CCL @ 41.36 -
02-May-08 - Initial Call Option - STO 1 Jun08 42.50 Call @ 1.38 - Expired
13-Jun-08 - Dividend Received - DIV 100 Dividend @ 0.40 -
07-Jul-08 - Interim Trade - STO 1 Aug08 35.00 Call @ 0.79 - Closed
05-Aug-08 - Buy Back and Roll Out/Up - BTC 1 Aug08 35.00 Call @ -5.11 -
05-Aug-08 - Dollar Cost Averaging - BTO 100 CCL @ 39.89 -
05-Aug-08 - Combined Cost Basis - $8,125.00 200 @ 40.63 -
05-Aug-08 - Continued Trade - STO 2 Oct08 40.00 Call @ 3.15 - Expired
12-Sep-08 - Dividend Received - DIV 200 Dividend @ 0.40 -
20-Oct-08 - Interim Trade - STO 2 Nov08 32.50 Call @ 0.99 -

BJS - Adjustment

The following adjustments were made today on BJS:

20-Oct-08 - Interim Trade - STO 3 Nov08 17.50 Call @ 0.29 -

NOTE: Two BJS positions were combined into one.

Current Position Summary:

Stock Investment: $11,238.00
Income Generated: $2,912.45
Percent Income Generated: 25.92%
Annualized Income Generated: 9.17%
Net Profit If Called: -$3,075.55
Percent Return If Called: -27.37%
Annualized Return If Called: -9.69%
Days Held to Expiration: 1031 days

Trade History:

25-Jan-06 - Initial Stock Position - BTO 200 BJS @ 40.05 -
25-Jan-06 - Initial Call Option - STO 2 Feb06 40.00 Call @ 1.54 - Expired
21-Feb-06 - Continued Trade - STO 2 Apr06 40.00 Call @ 0.49 - Closed
20-Mar-06 - Buy Back - BTC 2 Apr06 40.00 Call @ -0.11 -
20-Mar-06 - Second Stock Position - BTO 100 BJS @ 32.29 -
20-Mar-06 - Combined Cost Basis - $11,238.00 300 @ 37.46 -
20-Mar-06 - Continued Trade - STO 3 Jul05 37.50 Call @ 0.94 - Expired
14-Jul-06 - Dividend Received - DIV 300 Dividend @ 0.05 -
24-Jul-06 - Interim Trade - STO 3 Oct06 35.00 Call @ 1.19 -
13-Oct-06 - Dividend Received - DIV 300 Dividend @ 0.05 -
23-Oct-06 - Interim Trade - STO 3 Jan07 35.00 Call @ 0.79 -
22-Dec-06 - Buy Back & Roll Out - BTC 3 Jan07 35.00 Call @ -0.11 - Closed
22-Dec-06 - Continued Trade - STO 3 Jul07 35.00 Call @ 1.66 - Closed
12-Jan-07 - Dividend Received - DIV 300 Dividend @ 0.05 -
13-Apr-07 - Dividend Received - DIV 300 Dividend @ 0.05 -
21-Jun-07 - Buy Back & Roll Out/Down - BTC 3 Jul07 35.00 Call @ -0.11 - Closed
21-Jun-07 - Interim Trade - STO 3 Oct07 32.50 Call @ 0.79 - Expired
13-Jul-07 - Dividend Received - DIV 300 Dividend @ 0.05 -
12-Oct-07 - Dividend Received - DIV 300 Dividend @ 0.05 -
30-Oct-07 - Interim Trade - STO 3 Dec07 27.50 Call @ 0.55 - Expired
11-Jan-08 - Dividend Received - DIV 300 Dividend @ 0.05 -
14-Jan-08 - Interim Trade - STO 3 Apr08 27.50 Call @ 0.64 - Closed
14-Apr-08 - Buy Back & Roll Out/Up - BTC 3 Apr08 27.50 Call @ -1.71 -
14-Apr-08 - Interim Trade - STO 3 Jul08 30.00 Call @ 1.84 - Expired
15-Apr-08 - Dividend Received - DIV 300 Dividend @ 0.05 -
15-Jul-08 - Dividend Received - DIV 300 Dividend @ 0.05 -
23-Jul-08 - Continued Trade - STO 2 Aug08 35.00 Call @ 0.42 - Expired
23-Jul-08 - Continued Trade - STO 1 Aug08 32.50 Call @ 1.14 - Expired
22-Aug-08 - Continued Trade - STO 2 Oct08 32.50 Call @ 0.31 - Expired
22-Aug-08 - Continued Trade - STO 1 Oct08 30.00 Call @ 0.78 - Expired
14-Oct-08 - Dividend Received - DIV 300 Dividend @ 0.05 -
20-Oct-08 - Interim Trade - STO 3 Nov08 17.50 Call @ 0.29 -

BHP - Adjustment

The following adjustment was made today on BHP:

20-Oct-08 - Interim Trade - STO 2 Nov08 45.00 Call @ 1.19 -

NOTE: Two BHP positions were combined into one.

Current Position Summary:

Stock Investment: $12,754.00
Income Generated: $1,460.60
Percent Income Generated: 11.45%
Annualized Income Generated: 44.00%
Net Profit If Called: -$2,293.40
Percent Return If Called: -17.98%
Annualized Return If Called: -69.09%
Days Held to Expiration: 95 days

Trade History:

18-Aug-08 - Initial Stock Position - BTO 100 BHP @ 65.11 -
18-Aug-08 - Initial Call Option - STO 1 Sep08 65.00 Call @ 3.00 - Expired
22-Sep-08 - Continued Trade - STO 1 Oct08 65.00 Call @ 3.30 - Expired
23-Sep-08 - Second Stock Position - BTO 100 BHP @ 62.43 -
23-Sep-08 - Combined Cost Basis - $12,754.00 200 @ 63.77 -
23-Sep-08 - Initial Call Option - STO 1 Oct08 60.00 Call @ 5.10 - Expired
25-Sep-08 - Dividend Received - DIV 100 Dividend @ 0.82 -
20-Oct-08 - Interim Trade - STO 2 Nov08 45.00 Call @ 1.19 -

BAC - Adjustment

The following adjustment was made today on BAC:

20-Oct-08 - Interim Trade - STO 1 Nov08 27.50 Call @ 0.73 -

Current Position Summary:

Stock Investment: $3,372.00
Income Generated: $458.00
Percent Income Generated: 13.58%
Annualized Income Generated: 85.48%
Net Profit If Called: -$164.00
Percent Return If Called: -4.86%
Annualized Return If Called: -30.61%
Days Held to Expiration: 58

Trade History:

24-Sep-08 - Initial Stock Position - BTO 100 BAC @ 33.72 -
24-Sep-08 - Initial Call Option - STO 1 Oct08 32.50 Call @ 3.21 - Expired
26-Sep-08 - Dividend Received - DIV 100 Dividend @ 0.64 -
20-Oct-08 - Interim Trade - STO 1 Nov08 27.50 Call @ 0.73 -

AXP - Adjustment

The following adjustment was made today on AXP:

20-Oct-08 - Interim Trade - STO 2 Nov08 27.50 Call @ 1.23 -

NOTE: Two AXP positions were combined into one.

Current Position Summary:

Stock Investment: $9,400.00
Income Generated: $1,591.00
Percent Income Generated: 16.93%
Annualized Income Generated: 17.21%
Net Profit If Called: -$2,309.00
Percent Return If Called: -24.56%
Annualized Return If Called: -24.97%
Days Held to Expiration: 359 days

Trade History:

28-Nov-07 - Initial Stock Position - BTO 100 AXP @ 56.74 -
28-Nov-07 - Initial Call Option - STO 1 Dec07 55.00 Call @ 3.21 - Expired
07-Jan-08 - Continued Trade - STO 1 Feb08 55.00 Call @ 0.69 - Expired
08-Feb-08 - Dividend Received - DIV 100 Dividend @ 0.18 -
21-Feb-08 - Interim Trade - STO 1 Apr08 50.00 Call @ 0.89 - Expired
25-Apr-08 - Interim Trade - STO 1 May08 50.00 Call @ 0.30 - Expired
09-May-08 - Dividend Received - DIV 100 Dividend @ 0.18 -
19-May-08 - Interim Trade - STO 1 Jul08 50.00 Call @ 2.65 - Expired
23-Jul-08 - Interim Trade - STO 1 Aug08 42.50 Call @ 0.60 - Expired
08-Aug-08 - Dividend Received - DIV 100 Dividend @ 0.18 -
22-Aug-08 - Interim Trade - STO 1 Sep08 42.50 Call @ 0.28 - Closed
12-Sep-08 - Buy Back & Roll Out - BTC 1 Sep08 42.50 Call @ -0.16 -
12-Sep-08 - Interim Trade - STO 1 Oct08 42.50 Call @ 0.79 - Expired
23-Sep-08 - Second Stock Position - BTO 100 AXP @ 37.26 -
23-Sep-08 - Combined Cost Basis - $9,400.00 200 @ 47.00 -
23-Sep-08 - Initial Call Option - STO 1 Oct08 35.00 Call @ 3.67 - Expired
20-Oct-08 - Interim Trade - STO 2 Nov08 27.50 Call @ 1.23 -

ADP - Adjustment

The following adjustment was made today on ADP:

20-Oct-08 - Interim Trade - STO 1 Nov08 37.50 Call @ 0.84 -

Current Position Summary:

Stock Investment: $4,308.00
Income Generated: $259.00
Percent Income Generated: 6.01%
Annualized Income Generated: 37.19%
Net Profit If Called: -$299.00
Percent Return If Called: -6.94%
Annualized Return If Called: -42.94%
Days Held to Expiration: 59 days

Trade History:

23-Sep-08 - Initial Stock Position - BTO 100 ADP @ 43.08 -
23-Sep-08 - Initial Call Option - STO 1 Oct08 42.50 Call @ 1.75 - Expired
20-Oct-08 - Interim Trade - STO 1 Nov08 37.50 Call @ 0.84 -

Monday, October 6, 2008

Don't Panic!

If you're nervous about the recent market declines, the best advice I can give you is to avoid the media, both in print and especially on TV. The media just feeds your anxiety and makes it worse. For example, this morning, Jim Cramer said anyone that has a 5 year or less horizon should sell all of their stock because he didn't want to see people get hurt. However, everyone's situation is different. There's no one-size-fits-all advice, so generic comments like Cramer's make no sense and just cause people to panic.

First off, anyone with a 5 year or less time horizon, who needs the all of their cash at that time, should not be invested in the stock market in the first place. That's why my daughter's college fund is invested in fixed income, where the principal is protected, and not in stocks.

For retirement, yes, things look bad now and people have seen their account value drop. However, I bet nobody plans to cash out their entire account at retirement. They'll withdraw a portion of it each year and will probably live another 20-30 years beyond retirement. So if retirement is 5-10 years away, you have another 25-40 years of investing. That's plenty of time for the market to recover.

During retirement, I plan to focus on income generation and not on capital appreciation. This way I can live off the income without cashing out the principal. Then it doesn't matter what the value of the principal is, as long as it continues to generate enough income.

I've been investing since the 80's and have seen my share of market declines. In all cases, the markets eventually recovered and went on to new heights. This too will pass, eventually. We may have further to drop and it may take many years to get back to the level we were at a year ago, but we'll get there.

I plan to stay the course in all of my portfolios. I have an investment plan and I'm going to stick to it. The worst thing people can do is panic. I did that once, and learned a valuable lesson. Fool me once, shame on you. Fool me twice, shame on me.

Saturday, October 4, 2008

My Thoughts on Long Term Investing

During the past week we had a discussion on the Yahoo Group about long term investing. The topic started when someone asked what we thought the market would do if the House passed the rescue bill. My comment was that I didn't care how the market reacted since I'm a long term investor. Them someone asked how I define "long term". Here was my response:

In my opinion, long term investing never really stops. First you invest for retirement, but even once you retire I'm sure you plan to live another 20-30 years, and after that there's your heirs to think about.

My goal leading to retirement is to reinvest the income produced from selling calls, collecting dividends, and from the proceeds of closed positions, in order to compound my returns and grow my account.

After retirement, my goal is to generate an income from the capital I've accumulated by again selling calls, collecting dividends, and from the proceeds of closed positions, without having to touch the principal. Anything left over will be reinvested.

Then after I'm gone, my wife and/or daughter can continue to do the same. And then my grand kids, etc. etc.

So, I guess my definition of long term is forever.

However, I don't believe in putting all of my eggs in the same basket, and as such, I have different portfolios for different purposes. My covered call portfolio only makes up about 30% of my total retirement portfolio.

In my 401K & Vanguard portfolios I hold a variety of assets, including US stock funds, international stock funds, corporate bond funds, Treasury funds, gold funds, and real estate funds. My 401K automatically rebalances every quarter, and I manually rebalance my Vanguard funds when the percentages get out of balance.

At Scottrade, I have a portfolio of closed-end funds that generate monthly and/or quarterly dividends.

At IB, in addition to my CC portfolio, I also have a two stock portfolios, one for long term conservative investments, and one for short term speculative trading.

For my daughters college fund, I have a 529 plan at Fidelity, which is all in fixed income, since the money will be needed in the short term and preservation of capital is critical. I automatically add to that account on a monthly basis.

I also have an emergency fund with about 1 years worth of take home pay, just in case I'm unable to work or get laid off.

As for retirement, there's at least a couple of ways to approach it. One is to accumulated a large sum of money, put it into safe investments, like money market or T-bills and then live off of the principal. Another approach is to continue investing in income producing assets, such as covered calls, dividend paying stocks, real estate (rental), etc. and live off of the income without having to withdraw the principal.

I plan on doing the later and probably won't make to many changes to my investments when I retire in about 7-10 years, except to focus more on income generation and less on capital appreciation. Again with the goal of not having to tap into the principal if at all possible.