- Wrote Sep 40 Covered Calls on 40% of our ICICI Bank shares (IBN) at $5.20. We had closed out of a similar position in January taking advantage of the volatility and as the stock rebounded back we wrote the calls again.
- Wrote Aug 7.5 Covered Calls on 100% of our position in Advantage Energy Fund (AAV) at $0.75. The stock experienced a rebound following positive results from the test drills at the Glacier facility and we wrote the options to take advantage of that spike. Also the cost basis for Advantage Energy Fund (AAV) dropped sharply on 07/09/2009 due to a tax maneuver (taxable exchange of Advantage Energy Fund shares to Advantage Oil & Gas Limited Shares) that resulted in shareholders having to realize capital gains/losses as of that date. The spreadsheet below is updated with the new cost-basis.
- Our portfolio size experienced a ~150% increase as we transferred equity realized from the sale of our primary home over to our investment portfolio. This had the effect of our portfolio having out-sized cash allocation of over 60%. Rather than invest it all in stocks ASAP, our plan involves spreading purchases over the next few years using a combination of outright purchases along with writing cash covered put options. This should help alleviate timing risk.
Below is our updated portfolio – it is close to break even:
| Stock | Buy Date | Buy Price | Current Price | Current % Of Portfolio | Unrealized % Return | Yield as % of Portfolio Value |
| Altria (MO) | Various | 16.69 | 20.34 | 1.22 | 21.90 | 0.38 |
| Philip Morris International (PM) | 1/4/2005 | 32.19 | 52.68 | 5.60 | 63.64 | 0.45 |
| Kraft Foods (KFT) | Various | 26.33 | 29.63 | 2.37 | 12.55 | 0.23 |
| Pfizer (PFE) | Various | 24.37 | 19.61 | 1.69 | (30.60) | 0.30 |
| ICICI Bank (IBN) | 5/18/2006 and 08/01/2008 | 25.28 | 40.77 | 4.07 | 61.30 | 0.30 |
| Advantage Energy Fund (AAV) | 11/2/2006 | 11.22 | 7.00 | 0.70 | 81.82 | 0.17 |
| Central Europe & Russia Fund (CEE) | Various | 39.23 | 34.97 | 2.45 | (10.85) | 0.03 |
| Itron Inc. (ITRI) | 11/07/2007 | 85.01 | 70.07 | 1.40 | (17.68) | None |
| Anthracite (ACPIQ – formerly AHR) | 11/09/2007 | 7.97 | 0.02 | 0.00 | (99.79) | 0.00 |
| iRobot (IRBT) | 12/18/2007 | 18.65 | 16.01 | 1.28 | (13.42) | None |
| LDK Solar (LDK) | 01/22/2008 | 30.49 | 6.60 | 0.40 | (78.36) | None |
| Aegon N.V. (AEG) | 04/28/2008 | 15.99 | 6.50 | 0.39 | (59.34) | 0.00 |
| Frontline Limited (FRO) | 10/06/2008 | 36.95 | 30.81 | 0.92 | (16.61) | 0.17 |
| DryShips Incorporated (DRYS) | 02/09/2009 | 6.96 | 5.69 | 0.80 | (18.30) | 0.00 |
| Plum Creek Timber (PCL) | 07/23/2009 | 30.50 | 38.40 | 3.07 | 25.90 | 0.46 |
| CPFL Energia S.A. (CPL) | 07/28/2009 | 50.45 | 60.92 | 2.44 | 20.76 | 0.55 |
| BP plc (BP) | 08/05/2009 | 51.49 | 57.69 | 2.31 | 12.04 | 0.45 |
| AT&T (T) | 08/27/2009 | 26.38 | 26.24 | 2.10 | (0.55) | 0.39 |
| Sysco Corporation (SYY) | 10/13/2009 | 25.23 | 28.77 | 2.30 | 14.01 | 0.39 |
| Exelon (EXC) | 12/30/2009 | 49.38 | 44.62 | 7.12 | (9.64) | 0.39 |
| Telefonica SA (TEF) | 02/09/2010 | 68.74 | 72.69 | 7.73 | 5.67 | 0.57 |
| Cash | 62.42 | |||||
| Total Portfolio | (0.10) | 2.24 |
Below is a summary of transactions during the year:
| Stock | Buy Date | Buy Price | Sell Date | Sell Price | % Gain (Loss) | % Portfolio Return* |
| Ameritrade (AMTD) | 5/21/2008 | 17.69 | 01/19/2010 | 17.45 | (1.33) | (0.02) |
| AMTD Jan 17.5 Covered Calls (TQAAW) | 1/19/2010 | NA | 9/10/2009 | NA | NA | 0.22 |
| COST Jan 60 Covered Calls (PRQAL) | 1/19/2010 | NA | 9/10/2009 | NA | NA | 0.06 |
| IBN Mar 40 Covered Calls (ITZCN) | 1/22/2010 | NA | 10/06/2009 | NA | NA | 0.20 |
| Costco (COST) | 8/01/2009 | 62.27 | 02/09/2010 | 58.18 | (6.57) | (0.08) |
| Realized Gain/(Loss) YTD | - | - | - | - | - | 0.04 |
- % Gain/Loss Relative to Portfolio Value at Beginning of Year + Deposits
- The table assumes realization of profits associated with selling options only after the option is exercised or expiry.
We replaced Boeing (BA) with NYSE Euronext (NYX) in our watch list as Boeing shares pretty much “ran away” – its year to date gain stands at over 30% compared to 5% for the S&P 500 following positive announcements regarding its new assembly lines. Our current watch list follow – Archer Daniels Midland (ADM), Automatic Data Processing (ADP), Becton Dickinson (BCK), BHP Billiton (BHP), Cardinal Health (CAH), Cresud (CRESY), Eaton (ETN), Emerson Electric (EMR), AgFeed (FEED), Glaxo (GSK), Home Depot (HD), Intel (INTC), Nokia (NOK), China Nepstar (NPD), Nutrisystem (NTRI), Nucor Steel (NUE), NYSE Euronext (NYX), Qiagen (QGEN), Telefonica (TEF), UPS (UPS), and Waste Management (WM).
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