- Bought back the cash covered puts we wrote on VF Corporation (VFC Nov 70) at $3.20 (8/21/2010) for $0.10. VF Corporation shares vaulted 20% since our purchase lending the puts almost worthless.
- Closed out our 100% loss position on Anthracite (ACPIQ). Closing out the position allows to neutralize some of the capital gains we will have to book this year at tax time.
- Added NYSE Euronext (NYX) and Owens & Minor Inc. (OMI) from our watch-list to our portfolio at $30.38 and $28.11 respectively with around 2% of our portfolio value each.
- Added slightly more than 3% of our total portfolio value in cash.
The cash coverage requirements on the puts account for about 41% of our cash position. The cash position in our portfolio is still pretty high at around 44%. We will continue to use cash-covered puts along with direct purchases spread-out over a period of time to build the portfolio.
Below is our updated portfolio – it is around break-even:
| Stock | Buy Date | Buy Price | Current Price | Current % Of Portfolio | Unrealized % Return | Yield as % of Portfolio Value |
| Altria (MO) | Various | 19.19 | 24.92 | 2.10 | 29.85 | 0.16 |
| Philip Morris International (PM) | 1/4/2005 | 32.19 | 58.13 | 1.96 | 80.57 | 0.12 |
| Kraft Foods (KFT) | Various | 26.33 | 31.90 | 2.15 | 21.17 | 0.09 |
| Pfizer (PFE) | Various | 22.13 | 17.50 | 2.06 | (20.91) | 0.09 |
| ICICI Bank (IBN) | 5/18/2006 and 08/01/2008 | 25.28 | 51.18 | 2.59 | 115.35 | 0.11 |
| Advantage Energy Fund (AAV) | 11/2/2006 | 3.85 | 6.23 | 0.52 | 61.82 | 0.07 |
| Central Europe & Russia Fund (CEE) | Various | 39.23 | 39.99 | 2.36 | 1.95 | 0.01 |
| Itron Inc. (ITRI) | 11/07/2007 | 85.01 | 60.71 | 1.02 | (28.67) | None |
| iRobot (IRBT) | 12/18/2007 | 18.65 | 19.48 | 1.31 | 5.35 | None |
| LDK Solar (LDK) | 01/22/2008 | 30.49 | 10.74 | 0.54 | (64.78) | None |
| Aegon N.V. (AEG) | 04/28/2008 | 15.99 | 6.47 | 0.33 | (59.53) | 0.00 |
| Frontline Limited (FRO) | 10/06/2008 | 36.95 | 26.19 | 1.32 | (20.31) | 0.08 |
| DryShips Incorporated (DRYS) | 02/09/2009 | 6.96 | 4.24 | 0.50 | (39.12) | 0.00 |
| Plum Creek Timber (PCL) | 07/23/2009 | 30.50 | 37.09 | 2.50 | 21.61 | 0.14 |
| CPFL Energia S.A. (CPL) | 07/28/2009 | 50.45 | 72.02 | 2.43 | 42.76 | 0.18 |
| BP plc (BP) | 08/05/2009 | 51.49 | 40.50 | 1.36 | (21.34) | 0.09 |
| AT&T (T) | 08/27/2009 | 26.38 | 28.29 | 1.91 | 7.22 | 0.12 |
| Sysco Corporation (SYY) | Various | 25.92 | 29.56 | 2.49 | 14.03 | 0.10 |
| Exelon (EXC) | 12/30/2009 | 49.38 | 42 | 2.12 | (14.95) | 0.16 |
| Telefonica SA (TEF) | 02/09/2010 | 68.74 | 80.61 | 2.72 | 17.18 | 0.30 |
| Vonage Holdings (VG) | 04/06/2010 | 1.51 | 2.64 | 0.89 | 74.33 | 0 |
| Archer Daniels Midland (ADM) | 04/23/2010 | 28.27 | 33.54 | 2.26 | 18.62 | 0.09 |
| Intel Corporation (INTC) | Various | 21.91 | 19.84 | 2.67 | (9.47) | 0.12 |
| Google Inc. (GOOG) | 05/03/2010 | 528.36 | 612.53 | 2.06 | 15.93 | 0 |
| Cardinal Health (CAH) | 05/06/2010 | 34.42 | 31.99 | 1.62 | (7.06) | 0.06 |
| Pearson PLC (PSO) | 05/06/2010 | 14.32 | 15.41 | 1.82 | 7.59 | 0.16 |
| Nokia (NOK) | 05/14/2010 | 10.35 | 11.06 | 1.86 | 6.86 | 0.16 |
| Harris (HRS) | 06/07/2010 | 45.65 | 43.80 | 2.21 | (1.33) | 0.08 |
| Beckton Dickson (BDX) | 06/23/2010 | 70.20 | 76.40 | 2.57 | 8.83 | 0.10 |
| NYSE EuroNext (NYX) | 10/22/2010 | 30.38 | 30.29 | 2.04 | (0.30) | 0.15 |
| Owens & Minor Inc. (OMI) | 10/22/2010 | 28.11 | 28.33 | 1.91 | 0.78 | 0.08 |
| Cash | 43.79 | |||||
| Total Portfolio | 2.72 | 2.80 |
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) |
| AAV Aug 7.5 Covered Calls | 8/21/2010 | NA | 3/9/2010 | NA | NA | 0.06 |
| NTRI Sep 17.5 Puts | 9/17/2010 | NA | 4/19/2010 | NA | NA | 0.19 |
| IBN Sep 40 Calls | 9/18/2010 | NA | 3/5/2010 | NA | NA | 0.18 |
| EMR Sep 43 Puts | 9/18/2010 | NA | 6/10/2010 | NA | NA | 0.12 |
| ICICI Bank (IBN) – Called Away | 5/18/2006 | 27.54 | 9/18/2010 | 39.76 | 44.88 | 0.43 |
| VFC Nov 70 Puts | 10/18/2010 | NA | 8/21/2010 | NA | NA | 0.10 |
| Anthracite (ACPIQ formerly AHR) | 11/9/2007 | 7.99 | 10/18/2010 | (0.02) | (100.20) | (0.70) |
| Realized Gain/(Loss) YTD | - | - | - | - | - | 0.72 |
- % 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 have covered calls written against one-third of our ICICI Bank (IBN) shares (Jan 2012 55). We also have cash covered puts on Glaxo (GSK) shares (Jan 2011 35), Nucor Steel (NUE) shares (Jan 2011 40), Automatic Data Processing (ADP) shares (Jan 2011 40), Ameritrade (AMTD) shares (Feb 2011 15), Qaigen (QGEN) shares (Nov 2010 17.5), Costco (COST) shares (Jan 2011 55), VF Corp (VFC) shares (Nov 2010 70 at $3.10), Cisco (CSCO) shares (Jan 2012 20 at $2.64), Berkshire Hataway (BRK.B) shares (Jan 2012 75 at $7.15), and Itron (ITRI) shares (May 2011 60 at $6.90) with a cash coverage requirement of about 41% of our cash position.
We added Nutrisystem Inc. (NTRI) and Rovi Corporation (ROVI) to our watch list. Our current watch list follow – Applied Materials (AMAT), Air Products & Chemicals (APD), Brown-Foreman (BF-B), BHP Billiton (BHP), Caterpillar (CAT), Cresud (CRESY), Disney (DIS), Darden’s Restaurants (DRI), AgFeed (FEED), Goldman Sachs (GS), Home Depot (HD), McDonalds (MCD), China Nepstar (NPD), NutriSystem Inc. (NTRI), Pitney Bowes (PBI), Quality Systems (QSII), Rovi Corporation (ROVI), UPS (UPS), VF Corporation (VFC), and Waste Management (WM).
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