September 1, 2010
Today was finally the kind of day we've been looking for. All the markets were up over 2.5%. August was a terrible month and I’m glad to be out of it. In one day, the returns for our two lists and two portfolios have rebounded nicely. Our $100,000 Retirement Portfolio which shows -5.2% does not take into account the $16,000 which we have taken as $2,000 per month income. Factoring this in, produces a return on this portfolio of 10.8%. We have recovered about $5,000 of principal in the retirement portfolio in the last few days.
I want to talk about Burger King. The Analyzer is supposed to find opportunities based on the calls that are being sold against certain stock prices. On July 17, BKC was suggested by the Analyzer for our Conservative Stocks-to-Consider list and the $100,000 Retirement Portfolio. The stock languished through July and August, and we sold a few more low-priced calls against the stock on August 21 in the Retirement portfolio. Today Burger King announced that they were considering taking the company private by selling it to a private equity firm. The stock jumped 15%. This kind of information is usually kept very, very secret. Anticipated earnings reports, new product releases and stock buy-backs are usually more visible to the investor. Taking a company private is usually not anticipated by the public, but somebody “inside” has to be talking to somebody else “inside”. The fact that the Analyzer identified Burger King as this type of opportunity, which is usually not seen until the last moment, is only one indication of how the Analyzer can help with your investing.
p.s. SIGA didn’t jump, so I sold the calls as indicated in the August 21, $10,000 Aggressive Portfolio “Latest Update”.

August 28, 2010
It has been a crazy first week into the September cycle. The S&P500 lost 0.7% for the week even after a huge upswing on Friday. The S&P500 is down 6.3% year to date. Our two portfolios continue to do well and our Aggressive Stocks-to-Consider list is up 4.6%. Our Conservative Stocks-to Consider list is down 2.5% which is running counter to the last several months. Conservative picks have tended to do better over the last several months. The volatile stocks seemed to get more play this week.
I've mentioned in the past that you may want to consider using a "good till canceled" (GTC) limit price when placing your orders to sell calls. You can set the limit to the call price suggested by the Analyzer. In many cases stock prices fall on Monday morning, which is good for buying the stock but not good for selling the call. The call price will also go down. If the Analyzer is correct and the stock is expected to go up before the next expiration, the stock should rebound from its Monday morning low and the call price should rise with it in the following days or weeks. If (or when) a call price reaches your limit, the calls will be sold.
Here's a twist on that strategy that I employed this week with SIGA (one of my favorites). Last week, the Analyzer said to buy SIGA at $7.60 and sell the Sep10 at $0.30. As what happens often, SIGA went down on Monday morning and I bought it below $7.60. I then put in a GTC order to sell the Sep10 at $0.30. The order to sell calls was not executed during the week even though the SIGA share price climbed during the week. On Thursday I started to do a little investigating as to why the Analyzer had selected SIGA as a good buy/write (which is something I don't usually do, because I assume the Analyzer has identified a stock for a good reason). My research indicated that SIGA was anticipating a $2B order from the military. I also knew from working with the government many years ago, that the US government is on an October 1 fiscal year. The government likes to spend any money it has in its current year budget before the end of the fiscal year. It's a "use-it-or-lose-it” mentality. I figured that if this contract "might" be awarded by Tuesday (September 31), SIGA would see a huge upswing. So, I canceled my GTC order to sell the calls. If there is no "breaking news" from SIGA early next week, I will reinstate the GTC order. We will see what happens.

August 21, 2010
It’s expiration weekend. The “latest updates” have been posted for our subscribers.
Sometimes you have to reset your positions. This has happened this weekend with our two portfolios. You will notice that we have sold some stocks that did not get called nor reached the get-out price. These were stocks that just did not have good September premiums. In fact, you will notice that for our Conservative “Stocks-to-Consider” list, the premiums for twenty buy/writes produced only one half of a percent return.
So, we let the Analyzer find some stocks with better premiums for our portfolios, using these to replace those sold as poor performers. The markets are not helping our strategy, or anyone's investing strategy. It’s time to be more selective than in the past.
You will notice in our aggressive list and portfolio, that we are taking more risk. Several buy/writes that have been labeled “RISKY!!!”. As subscribers, you will have to decide whether you want to make these risky buy/writes. If you are well diversified, choosing one of these might pay off.
To provide a hedge in your portfolios, you may want to consider some bearish ETF's like FAZ or QID. These EDF’s tend to have large premiums and the share value will increase if the market goes down. VXX is a measure of market volatility and also has good premiums. It moves as volatility in the markets move. Some of these ETF’s showed up this weekend when running the Analyzer with the default parameters.
It might be a good idea to take some money off the table at this time. We will continue to maintain our strategy through this tough time but will try to be a little more selective in what the Analyzer provides.

August 12, 2010
The trip to the Rockies was wonderful and I was able to forget about investing for two weeks. Coming back was a JOLT!!!. It's the same old stuff but worse - employment is worse than expected, trade balance is worse than expected, GDP is going to be worse than expected, foreclosures are worse than expected, debt is higher than expected, etc. etc. etc.
Who is doing all this “expecting”?
I don't like to get into politics in my BUZZs. But I feel I need to say something when it's affecting my and your investing strategies. Here is my take on what has happened, is happening and will happen. For some reason the media, including the financial media, are not connecting the dots. It seems fairly simple to me.
Two things have already happened that have gotten us into this mess:
1. The banks were given a lot of money by the government to lend to business (especially small business). This has not happened. The banks have kept the money for their own other interests. By the way, small business accounts for 80% of employment in this country.
2. A new health care plan has been passed which will impact both small and big business. Unfortunately, it is not clear what the cost impact of this bill will be to business. All they know is that it will have an increased cost impact for each employee they have. Therefore, they are reluctant to hire. The lawyers (ugh) are going to have to figure this out.
Here is what is happening now:
Pending tax increases, confusion about immigration laws and a continuing deterioration of all the “financial numbers”. This is a wait-and-see time, so hiring isn’t happening now.
Here’s what is going to happen:
Nothing good. There will be a continual drifting (generally downward) of the markets, increased frustration for businesses, employees and the unemployed. Businesses, employees and the unemployed are going to be very cautious in their spending. Business will not hire until there is a clear picture of what government imposed additional costs are going to be. Many think the November elections will change things. They may just add more confusion and create a continuing drag on the economy.
Investors will have to be very cautious with their investment dollars.

July 24, 2010
Our first week since July expiration has been spectacular. We are off to one of the best starts of  an expiration cycle in a long time. See the table at the right. Anticipation is that the first part of next week should be good with earnings reports. The big question is "What will the unemployment numbers look like at the end of the week?" Can good earnings overcome bad unemployment numbers? If we can build up enough upside with our positions, as we have done this week, they should act as a buffer to any bad news later in the cycle.
I will be on vacation for the next two weeks visiting the parks, monuments and mountains in Colorado, Utah and Wyoming. I will not be "buzzing" during this period but will be monitoring progress on our lists and portfolios from afar.

July 17, 2010
Our "Latest Updates" are available for subscribers this weekend.
Things were going on pretty well until yesterday. Our Aggressive list and Aggressive portfolio both got it by pharma stocks that tanked. With our Aggressive lists and portfolios we look for calls that have high premiums. Recently a larger number of pharma stocks have been found by the Analyzer with pretty spectacular call premiums. As I said several weeks ago, we were going to continue to select some of these "RISKY" buy/writes for our $10,000 Aggressive Portfolio. Sometimes we hit it big, as earlier in the year. Sometimes we get “tanked’, as in the last two months. I'm sure the Analyzer will continue to find pharma companies that have the possibility of tremendous upside (or downside). We will continue to list some of these in our Aggressive “Stocks-to-Consider” list and I am sure some will pop up when you run the Analyzer in the future. We will refrain from putting them in our $10,000 aggressive portfolio for the next few months. You are free to do what you want but understand the risk.
We were able to replace most of the stocks in our $100,000 Retirement Portfolio and all but one of the stocks in our $10,000 Aggressive Portfolio this weekend. We had to sell three stocks in each of these portfolios because of the get-out price rule. We also had several stocks called even though the S&P 500 was down 4.7% since last expiration. This gave us a lot of cash to play with. We have been able to maintain at least 9 or 10 stocks in each of portfolios this year. It is important to maintain diversity in your portfolios.
This weekend’s selections had poorer call premiums but their spreads seem to be attractive. Some have a lot of potential for stock price appreciation. If earnings reports continued good, this could result in some strong moves by our selections.

July 12, 2010
I did not write a BUZZ over the weekend. I wanted to see if we could sustain five consecutive UP days since July 4. We did. Five consecutive up days is good for the start of a new quarter. It indicates the professionals are anticipating a good earnings season. Alcoa’s report after the close today was very favorable.
Expiration will occur this coming weekend and we can anticipate interesting premiums on calls for stocks that are anticipated to show good earnings. The Analyzer will find these opportunities. We will have cash in both of our portfolios from stocks sold at the get-out price and stocks that will get called on expiration. The return for our $10,000 Aggressive Portfolio will probably go over a 50% for the year so far.
We are probably going to see SIGA called next weekend. We have had SIGA in the $10,000 Aggressive Portfolio since January and have sold calls with good premiums each month. If it does get called we will realize a 64% return on this buy/write. Not bad!!!

July 7, 2010
We have had our fireworks so far this week. The S&P 500 was up over 37 points (3.7%). The professionals think this is in anticipation of good earnings reports. I suggest that the market will continue to be "choppy". But we will take these kinds of days. Our lists and portfolios are doing very well against the S&P 500, as well as all of the markets. Remember that you have to add 12 percentage points ($12,000 taken out as income) to our $100,000 Retirement Portfolio in order to establish the true return which is a positive 4.8%.
We have made a change to the returns calculated by the Analyzer. For the last many years we have shown the returns as "annualized". For some reason investors seem to think in terms of annualized returns. But some of our annualized returns seem to be unbelievable, even though the calculations are correct. With covered calls, we are looking at shorter time periods - 30 to 60 days. Our objective is to achieve a 5% per month return. We generally do this. From now on the Analyzer will show the return anticipated if the stock is called on the expiration date.
Today, something that doesn't happen very often occurred. Every one of our 20 Conservative Stocks-to-Consider was up.
More stocks are being added to the $1 strike price category. Currently, there are 326 stocks that we are listing in the Analyzer that have $1 strike price spreads. This is tending to slow down our calculation time - so please be patient.

July 4, 2010
Last week was pretty brutal. We got more surprises than I expected when I closed my last BUZZ with “Looking forward to the surprises of next week”.  The DOW was down 457 points (-4.6%) and the S&P500 was down 54 Points (-5.0%). We have had to give up a lot of stocks to the get-out price, which locks in a loss. I see the markets struggling for awhile and if we end up like last month, with get-outs ending up below get-out price at expiration (July 17). A few of our buy/writes are actually above their strike prices. That’s pretty good after last week. Our $10,000 Aggressive Portfolio stayed exactly where it was one week ago at +47.5%. That’s good. Our $100,000 Retirement Portfolio remains below our starting principle amount, but shows a positive return if you include the $12,000 we have taken out for income. That’s not good but OK for now.
So this week I will close with, “Looking forward to the fireworks of next week”.

June 26, 2010
One week since expiration. Monday down, Tuesday down, Wednesday flat, Thursday down and Friday flat. The S&P 500 ended down 3.6% for the week. Not very encouraging. Our two lists are each down 3.3%, not as bad as the S&P 500, but not making for a good week. Our $100,000 Retirement Portfolio dipped back below the initial principal value of $100,000. Our $10,000 Aggressive Portfolio actually moved up during the week from 45.8% to 47.5%. This was due to a strong move by SIGA which was put into this portfolio in our first month of the year. Right now the return on this buy/write up 61.9%, and the current price has not yet reached the strike price of $7.50.

There continues to be uncertainty in the markets. Going forward it will be good days and bad days, good weeks and bad weeks, good months and months. Two of the key elements in the Covered Call Analyzer strategy, as found in our "Strategy and Philosophy" page (available to subscribers), are diversification and strict use of a get-out price.

In our $100,000 Retirement Portfolio we try to maintain at least 10 different stocks. We have been able to do that this year even though our principle amount dropped below $100,000 during some months and we took out $12,000 ($2,000 each month) for income. We started within ten and we still have ten.

In our $10,000 aggressive portfolio we started with six buy/writes and are now up to nine. This is due primarily to the growth in this portfolio. Rather than buying more of the same stock,s we rely on the Analyzer to find new opportunities.

Maintaining the get-out price is also important. So far this month (only one week), we have sold three of the twenty stocks in our Aggressive Stocks-to-Consider list when the hit -15%. I don't know if they are going to come back above the get-out price between now and expiration. Generally they do not come back by expiration. As I stated in last week's BUZZ, five of the six stocks on our aggressive list of May did not come back.

Looking forward to the surprises of next week.

June 19, 2010
It looked like June was go to turn into a second in a row terrible month. Actually, May turn into a very good month. We were able to overcome the losses realized in April (and early May). Some observations as we are nearing the halfway point of 2010:

• Our conservative positions have done much better than the aggressive positions over the last two months. This is probably due to volatility. Aggressive stocks go up and down much faster than conservative stocks. With volatile stocks, get-out is your friend. Of the six stocks on our May Aggressive Stocks-to-Consider list where we exercise our get out price, five remained below the -15% get-out price through this weekend's expiration.
• Realizing that our aggressive selections have high risk/reward possibilities, we will continue to use a few risky stocks in our $10,000 Aggressive Portfolio in the future. This is what got us to almost a 50% return so far this year. This is a portfolio of big winners and big losers. It is suggested that only a small percentage of your overall portfolio be considered for this portfolio.
• You may notice that we are sometimes raising or lowering the strike price as we sell more covered calls against existing stocks. This is possible due to the one dollar strike prices on some stocks. We will generally not lower the strike price to below the original purchase price, however. This can lock in a loss if the stock is called.
• Sometimes you can continue to sell calls against a stock for many months. Take a look at SIGA in our $10,000 aggressive portfolio. We have had this stock since January 16 and have sold the 7.5 calls each month, resulting in a 52.5% return. This has become a very good buy/write, write, write.
• I mentioned above that our conservative positions have been doing better than our aggressive positions. Take a look at May’s Conservative Stocks-to-Consider list. This list produced an initial premium value of only 0.9%. It ended the month up 7.5% (well above our target 5.0%). This indicates two things. The spreads on the stocks were large enough to allow stock appreciation before hitting the strike price and the Analyzer identified some good stocks that were going to go up.
• There is a good chance that our $10,000 Aggressive Portfolio will move above 50% by the halfway point in the year.
• Our $100,000 Retirement Portfolio was able to regain the full initial principal that was put in ($100,000) on January 16 to $100,358 after taking out $2,000 per month in the first six months ($12.000).

Not a bad month!

June 11, 2010
Another volatile week! Our returns have held up well and actually improved. Keep in mind that our $100,000 retirement portfolio is, in fact, doing better than the markets. Even though the return for this portfolio is -4.1%, this is after $10,000 in income has been taken out. The actual return is 10% higher than shown in the table to the right. I would guess that retirees having stock only portfolios, not using covered calls, but still taking out 10% of the portfolio value as income, could be as much as 10% below the markets year-to-date.

The option symbol change has been completed and interpreting what the option symbol means is much clearer. In the past all option symbols were limited to a three letter root, many with the letter "Q" in them. If your stock was on the New York stock exchange and had three letters, its stock symbol was used as the option symbol root. However, for stocks on the NASDAQ, a special three letter root had to be assigned to all those stocks. Letters were also used to identify the strike price and the expiration month. All this has been simplified. Today the stock symbol is used as the option root, the expiration date is identified, and the strike price is identified with a number.

COCO1017G15 is the option symbol for the stock COCO with a strike price of $15.00, expiring on July (G is the seventh letter in the alphabet and represents the seventh month of the year) 17th of 2010.

You may have noticed a slowing of our server after you submit your parameters. This is because there are many more combinations that we are analyzing. Many new $1 strike prices are now included in our calculations. Please bear with us since there is a lot more calculation required on these additional buy/write combinations. But the Analyzer will still come up with the ones you want to consider.

June 5, 2010
This is NOT the time to panic. Even though things have looked terrible since May 22 (last expiration), only the wild swings have been wrenching. Let's look at the S&P500, that has had the wildest swings. The S&P500 closed on May 21 at 1,080.59 and closed on June 4 at 1,064.91, a decline of 2.1%. In between the S&P500 high was 1,104.9679 and the low was 1,044.61, a swing of 3.9%. As I mentioned in earlier BUZZ’s, watching your stocks daily can cause apoplexy.
If you have been watching your stocks daily, you probably feel that we are in really bad shape. Not so! Since May 22, our Aggressive "Stocks-to-Consider" list has actually gone from +4.3% to +4.6%. Our Conservative "Stocks-to-Consider" list has dropped slightly from +0.9% to -0.9%. During the same period, our $100,000 to Retirement portfolio has gone from -8.7% to -9.1%. However, this is after $10,000 was taken out in $2000 increments during the first five months. If you add this 10% to our retirement portfolio return you end up at +0.9%. Similarly, the $10,000 aggressive portfolio has drifted from 40.3% to 39.2% since May 22. In the last two weeks the S&P500 is down 2.1%.
So why are we hanging in there? The economy is in bad shape and recovering more slowly than anticipated. Debt continues to rise. Bad news and tension (Gulf oil leak, Israel/Gaza, unemployment, the euro, etc., etc.) hit us every day. Here are some of my thoughts:

• There are many good companies out there that are doing fine in this economy. You have to trust that the Analyzer will help find them.
• Only 4 of the 58 stocks identified on May 22 in our lists and portfolios have been sold at the get-out price.
• The Aggressive List has moved up because we did consider some bearish ETFs, as suggested in my May 22 BUZZ.
• The covered call strategy along with our get-out price allows us to roll generated cash into new short-term opportunities every month. This is not buy and hold.
• Covered call premiums provide a cushion of insurance.
• Our two portfolios built up large reserves in the first four months of the year allowing us to take some hits in the last six weeks, without giving up the kinds of losses realized by the markets. The S&P500 is down 6.2% since January 17.

May 28, 2010
This has been another week where the average investor does not want to check their stocks throughout the day. Here is a chart of the S&P 500 since last weekend (May’s expiration) when we updated our lists and portfolios.

Almost every day, there was a major swing at the beginning or the end of trading. If you were fortunate and put off buying your stocks till Tuesday, and then held off selling your calls to Wednesday, you are quite clairvoyant. However, most of us probably bought the stock and sold the calls on Monday morning. In order to maintain consistency in tracking our "Stocks-to-Consider" lists and our two portfolios, we assume that the stocks purchased and calls sold are at the close price on the preceding Friday. We assume that most of our subscribers do the same who buy and sell on Monday morning, get prices that are close to the Friday close prices.  Monday morning was rather tame, so the prices were pretty close to the Friday close. If you checked your positions on Tuesday morning you probably thought, "Oh no, I've made a huge mistake!".
Actually things worked out pretty well for our lists and portfolios when looking at the entire week. All closed up in compared to the S&P 500 that was flat for the week.

May 22, 2010
Our April buy/writes have taken a real beating. Even though our portfolios "hung in there", our two lists performed poorly during the last 35 days. A company can declare excellent earnings and their stock takes a hammering. A company can have an excellent balance sheet with lots of cash, and their stock goes down. The government or some official makes some kind of statement and the markets overreact. I have been investing in using covered calls for over 40 years and I've never seen a market like this.
Here is my take on what is going on. It’s DEBT! Greece is just the tip of the iceberg. One third of their workers are in public service, unemployment is around 20% and their government can't stop spending or raise taxes. Now we are hearing that other European countries (Italy, Spain, Portugal) have similar problems. The rest of Europe can't seem to get together on whether to provide "bailouts" with a dropping euro.
I think Greece could be a mirror of what the US will be facing in a few years. We are the biggest "in debt" country in the world. Our debt service in the next few years will be approaching 25% of GDP-that's just interest, no principal payments. I think this DEBT worry is the main issue in our troubled markets.
Going forward, the markets will continue to generate stressful times for investors. Some suggestions:

• Look for big spreads and high premiums - there are a lot of them this weekend due to high volatility.
• Take some money off the table.
• Stay away from financials.
• Consider buying some highly leveraged bearish ETF's (TZA, FAZ, DRV) and selling out-of-the-money calls against them as a hedge. Some of these popped up on the Analyzer this weekend.
• Consider buying stocks and selling calls for companies located in Asia, South America and Canada.
• Stay positive and optimistic.

We have applied some of these suggestions in our latest updates this weekend.

May 15, 2010
It has been a crazy ride these last three weeks. I took a huge a risk when we had the 1000 point drop in the Dow several Thursdays ago by suggesting that we suspend the get-out price. I know that many of you did likewise and have seen stock prices whipsawing wildly. It seems that this temporary strategy is working, however. If you look at each of our lists and portfolios you can get a picture of what suspending the get-out price in a volatile market realized. Our Aggressive List of 20 buy/writes published on April 17 had three stocks sold at the -15% get-out price prior to announcing the suspension. Since that time many of these stocks dipped below -15% but were retained. As of this weekend only one additional stock is below -15% and there is one stock above the strike price. For our Conservative List of 20 buy/writes, we had no stocks dipped below our get out-price before the suspension. Currently three stocks in this list are below -15% and two are above the strike price.
Our portfolios are doing a little better. The $100,000 Retirement Portfolio and no stocks dip below the get-out price prior to the suspension. Currently there is one below -15% and one above the strike price. The $10,000 Aggressive Portfolio had two stocks sold at -15% prior to the suspension, but right now there is only one stock price below -15% and one is about the strike price.
We will continue to keep the get-out price suspended until next week (expiration weekend on May 22). This is a hard call and our subscribers need to make their own decisions on this. If we had sold all of our stocks when they dipped below -15% during the get-out price suspension we would be in a much worse position this weekend - a locked in position.
Next weekend, we will look at all of our positions and determine which strategy is best in going forward-sell more out-of-the-money calls on stocks that still have good premiums at our initial strike price, dump stocks that will not produce satisfactory returns going forward, and use the cash from dumped stocks and called stocks to establish a new base of Analyzer found opportunities going forward from then.

May 8, 2010
Well, this will be a week to remember. Even the old pros on the financial talk shows said they had never seen anything like it. I've been in the covered call business for 40 years, I have not seen anything like it-but some history has come close. That is why I like to think of this site as an educational experience. I don't know what you did with your positions this week, but we suspended our get-out price policy on Thursday. We did exercise the get-out price on a few (very few) positions prior to this week. Volatility had spiked from below 25 above 40 in a matter of hours. It remained that way on Friday and will probably remain that way for a while. I know you've all seen the chart for the week with a huge dip when things went crazy on Thursday so I won't show it here again. Instead let's look at the VIX chart for the last 10 days:
 Let's go back and look at some history. During the "big crash" from September 2008 to March 2009, the DOW and the S&P 500 dropped about 48%. During that period we modify or suspended our get-out price rule. In some cases we moved our transactions from the Monday after expiration to the Tuesday or Wednesday after expiration because of high volatility. You can go back and look at this history in our results pages. During that period our lists and portfolios took some major hits, but our $100,000 Retirement Portfolio ended the period down 31% and our $10,000 Aggressive Portfolio ended the period down only 5%. Both did better than the markets in this down period. Why? Because we hung in there, we didn't panic and we rode out the good months and the bad months.
Some thoughts about this correction:
1. We were due for a correction. Many suggested a 10% correction was in order. Since the peak on April 26, the Dow is down 7.4% and the S&P 500 is down 8.8%-so we're getting close on the anticipated correction. Because volatility is high, we could see a rapid turnaround when the correction is over.
2. The Analyzer finds good stocks. These stocks tend to be more volatile because those "in the know" are playing with them and their options.
3. Before selling a dropping stock, you might take a look at the call and put options for that stock one or two months out. What are these options telling you? The call options for most of our list and portfolio stocks are pretty spectacular. A lot of call traitors are betting on an upturn.
4. Before selling a dropping stock, you might take a look at the “after hours” activity in the stock. Yahoo and MSN both provide real-time and "after hours" pricing. This is where the specialists make many of their trades. What is this telling you?
Hang in there, we will get through this.

April 30, 2010

This is a chart of the S&P500 for the last two weeks. I apologize for the fuzziness but I had to snatch this chart and the one below from MSN's website and shrink it. But I think you will get the picture. If you are like most investors and check your stocks every day (or several times a day), you have probably gotten a little apoplectic. This chart is a nightmare for daily stock watchers. That is why I suggest our subscribers do not need to “check” constantly. If the Analyzer is doing its job, our selections should be sounder than the general markets. The only thing you need to do is be alerted when a stock is approaching its get-out price. This can be easily done by requesting a financial service, like Yahoo or MSN, to send you an alert when one of your stocks approaches your get-out price. You can then watch the stock price and unwind the position if it reaches the get-out. Of the 60 buy/writes listed for our two lists and two portfolios on April 17, only for have gone below the get-out price. While the S&P500 as dropped 0.5%, our aggressive list is up 0.6% and our conservative list is up 1.5% (is another indication that being a conservative as we go forward may be in order?). We are doing better than the markets and daily “checking” isn’t going to change that.

And this is a chart from January 16, 2010 when we started our two portfolios. It's a much nicer chart for "daily” stock watchers. It was probably fun to check your stocks daily. The S&P500 was up 4.5% in this period. Of course our two portfolios did much better during the same period - the $10,000 Aggressive Portfolio is up 42.6% and the $100,000 Retirement Portfolio is up 18.1% when you include the $8,000 income taken in the first four months. Not bad! I need to call your attention to the end of this chart, which is the same time frame as the above chart. Note the flattening and larger gyrations at the end of this chart. We are now at the mercy of the "news" - Goldman, Wall Street regulation, the end of the stimulus, the oil leak, and political backbiting. This is not a time to be getting overly nervous about your individual stocks. Go with the flow. I do not want subscribers having a nervous breakdown.

April 23, 2010
We are one week into the expiration cycle. In this one week, both our lists and portfolios have moved up smartly. Our conservative list is actually doing better than the aggressive list so far. This could be because the aggressive stocks have had their run and investors, concerned about the “toppyness” of this market, are turning to more conservative companies. In fact, if you run the analyzer this weekend with the default parameters, the conservative resulting list (not the hi or no PE button) will be very short. The 52-week hilo parameter for the default settings is 90%. If you change this to 100%, you will get many more selections. This is because many stocks are at their 52-week high and are beginning to move above their high-level everyday. It is important that subscribers understand that this market can probably not continue to move higher. At some point there will be a correction. We must anticipate this correction and be prepared to take some money off the table.
We are right in the middle of earnings reports and the general consensus is that earnings should be improved. The economy is recovering (slowly) and some companies are realizing improved earnings. Reactions to earnings can be confusing. For example ALGN had very good earnings, but the stock dropped 12% after earnings were announced. At the other end of the spectrum, PCX had poor earnings and increased 10% after earnings were announced. PCX was identified by the Analyzer back on April 22 (not expiration weekend) and I did the buy/write. ALGN has not shown up on our Analyzer buy/writes for several months. My only conclusion is that because the call premiums on PCX were better than those for ALGN indicated that the “professionals” knew something that was going to push PCX up and that ALGN was not going to react favorably to their improved earnings.
In the last several months, I noticed some of you have wished you had just purchased the stock had not sold the covered calls. Many of the Analyzer picks have blown right past the strike price and ended up with significantly higher returns than selling the calls and then loosing the stock at the strike price. I can only caution you that in this "toppy" market, covered calls act as insurance if and when a downturn occurs. We have found the covered call strategy, in the long term, performs better than the markets in general.

April 17, 2010
Sorry about the lateness in getting the updates on the site this weekened. I'm traveling and have had some difficuly finding time and places to access the Internet. We are still having touble with the data provided by our provider as they are "slowly" converting their option symbols to the new system. Please double check our data with a third party source (Yahoo or MSN). You will also noice that there are some duplicate relults. These can be spotted easily. We expect these problems to continue through April - please bear with us. Most of the buy/writes found by the Analyzer are still good. Note that our results are continuing strong even though the markets have leveled out. Our $10,000 Aggressive Portfolio if up 45% this year. Our $100,000 Retirement Portfolio is up 18% if you include the income tken so far each month.

April 10, 2010
One week to go before expiration and everything is looking good. Expiration weekend is early this month with only 28 days between the March and April expiration. Going forward, we will have 35 days between the April and May expirations. I don't like the longer months. I like to keep my money moving.
Next weekend (April expiration), we should show some good numbers even though the last four weeks have been rather dull and choppy for the markets. Both are lists are currently above our goal of 5% per month. Both of our portfolios have moved up nicely.
Every now and then we get some squirrelly results from the Analyzer. We have a very good data provider, but sometimes this data is wrong. When it is wrong it usually results in very strange return numbers (over 500% returns). This could be exacerbated by the fact that option symbols are gradually being converted. We discussed this back on our January 28 BUZZ. If you look at Yahoo's, MSN’s, or our option symbols, you will see that they are all different. Even my personal broker uses a completely different set of option symbols. I have noticed recently that Yahoo's finance website has been having problems with their option volume data, so we are not unique, although sometimes I would like to think we are. As we state in our disclaimers and elsewhere on our website, please double check the data the Analyzer provides before making trades. I am confident that most of the data from our provider is accurate.March 29, 2010
I did not do a BUZZ yesterday or the day before because I was concerned about today. I keep anticipating a selloff, but this market just keeps chugging away. If you look at our results (at the right through today) you'll see that both lists and both portfolios are ahead of the markets. Remember to take into account the $6,000 we have taken as income in the $100,000 Retirement Portfolio. This would put its return at a real 6.1%. Our $10,000 Aggressive Portfolio has really taken off and is currently at 33.4%. That puts us well ahead of our return for 2009 through March.
Now I am concerned about the end of the quarter-March 31. I suspect we will not see a turndown before then, but could see some selloff on Thursday or Friday to allow mutual funds and hedge funds to restructure their portfolios. Then earning reports will start. Hopefully our picks by the Analyzer are anticipating some good earnings reports.

March 20, 2010
This expiration weekend marks the best month so far this year. Our Aggressive Stocks-to-Consider List was up 8.9% when averaging all 20 of the stocks listed. That's well above our target of 5% per month when using the covered call strategy. Our Conservative Stocks-to-Consider List was up 3.1% for the February list. Our rolling portfolios are even better: our $100,000 Retirement Portfolio is up 3.5% after taking out $2,000 for income in January, February and March. The $10,000 Aggressive Portfolio, in which we use all premiums for the purchase of new buy/writes, is up 22.9% so far this year versus the S&P500 rise of 2.1%. Because of this we have selected some RISKY buy/writes in this weekend's update of the $10,000 Portfolio. They are so marked, so beware. We might be feeling a little euphoric after the results of ITMN and TIVO last month. Who says the Analyzer can’t spot hot stocks?
March was a record for the most stocks called in both the Retirement and Aggressive portfolios. This is exactly what we want to happen each month. The Analyzer finds good buy/writes, the stock goes up, gets called and provides cash for new Analyzer found buy/writes.
We have begun listing stocks that have $1.00 increment strike prices. This is a trial being conducted by the markets. There are supposed to be only 35 stocks in this trial, but a lot more are listed with $1.00 strikes. We will try to keep up with identifying the trial stocks, add stocks as necessary, and keep you advised.
We do not include any dividends in our return calculations. However, dividends can play a role in how well stocks found by the Analyzer will perform. For example, CMC shows up on our Aggressive Stocks-to-Consider List this weekend. It has a $0.50 premium on a $16.16 stock. If called this stock, it will provide a real return of 10.2%. A $0.12 dividend is to be paid to shareholders early next month. This will improve the return to 10.7% if the stock is called. Every little bit helps. There is a noticeable decline in premium value. It will be interesting to see how the markets react to the “vote” this weekend.

 March 13, 2010
 It should be a pretty dull wait for next week's expiration. As you can see from the table above, our Lists and Portfolios are doing very well. So well, in fact, that we are pretty much maxed out. In our $100,000 Retirement Portfolio, we exercised our get-out price for one stock (NTRI) but eight of the remaining ten are now above the strike price. For the $10,000 Aggressive Portfolio, there has been no get-out price sale and four of the six stocks are above the strike price. I think we can relax in anticipation of next week's expiration. We should have a lot of “fresh” cash to find new opportunities as these stocks are called.
For the remainder of this blog, I will share two tips.
1) Many Mondays after expiration weekend are “downers”. This means you can sometimes buy the stock recommended by the Analyzer at a lower price. It also means that the call price is probably down, too. If the Analyzer is right, however, we can expect the stock price to go up during the month to “capture” the event that the insiders know about. We expect the stock price to increase towards the strike price during the month. If this is the case, the option price should also increase. The tip is to consider using the good-till-canceled (GTC) option when placing your covered call trades. This would provide a buy/write with a better return than the Analyzer projected – lower stock price and higher call price. This strategy has to be monitored and may require some adjustment as time passes. Remember, options are an asset that “wastes” with time.
2) The markets have recovered since the double dip of March 2009. That's 52 weeks ago. Our 52-week high low ratio has been set to 90% as the default. However, many stocks are at or near their 52-week high and don't get captured by the Analyzer when the default is set to 90%. You may want to consider adjusting the high low ratio to 95% or even 100% to see what shows up. We will keep the default at 90% for the time being but as a subscriber you may want to play around with this parameter.

March 5, 2010

Let’s talk about GREED!!! This week the first two stocks identified by the Analyzer on our Aggressive Stocks-to-Consider List (ITMN and TIVO) shot up in price. A lot of investors made a lot of money. Let’s look at each one and what happened, depending on the strategy used.

This table shows the returns for each strategy. They are all spectacular!!! As covered call writers, we are locked in to the Covered call return as long as the stock price stays above the strike price. Our stock will probably get called. As “Buy and Holders”, we can hold on and the stock may go up some more in the next few days. The naked call buyers, made out like bandits!!! These are outlandish returns.

How do you feel, right now, if you did the buy/write on one, or both, of these stocks? Are you upset because you sold the calls? Should you just have bought the calls? This is what the pros do, and the returns above indicate why. If you are an insider, and you know something good is going to happen to your stock, you buy the calls. And that is what the Analyzer looks for – who’s buying the calls and driving up the premiums? Some subscribes use the Analyzer to identify stocks to buy stock (and not sell the calls). Others use the Analyzer to identify calls that are “out of line” and just buy the calls.

Our strategy is to not get GREEDY. It’s much more risky (we identified ITMN as RISKY! on our Aggressive list) to buy the naked calls. Our strategy is Covered Calls, and we think our returns are just fine.

March 2, 2010
For those of us who bought the ITMN stock and sold the hefty calls, this is the beginning of two weeks of anticipation. If you did buy ITMN, you should read this article:

http://www.thestreet.com/story/10690025/3/biotech-stock-mailbag-biosante-pharma.html

The article indicates that the FDA will not be pleased with the two tests conducted on pirfenidone - one good, one not-so-good. Taken together, they pass. The FDA may rap ITMN for submitting two sets of data in their pre-meeting briefing document, submitted a few days before the actual advisory panel meeting on March 9. This could cause the stock to tank. But at the meeting on March 9, the FDA could approve the drug, which the author of this article thinks will happen. If you have a get-out price in effect, it may get tested. We need to decide if we want to hang on until after the FDA meeting on March 9. A lot will depend on what kind of premium you got on the calls. We will all know if this was a crap-shoot, or not, on March 9.

February 27, 2010

I want to look at our two portfolios, now that we are one week past the last expiration. Our $100,000 Retirement Portfolio has only two of the 11 stocks with negative returns. The worst, HP, is down 5.7%. The other nine stocks are up with three stocks already above their strike price. The best return for these "up" stocks is 11.1%.

There are six stocks in our $10,000 Aggressive Portfolio. Four of the stocks are up big time-with returns ranging from 10.3% to 29.2% (MTG) already. The other two stocks are down slightly-the worst down 0.5%.

Both of these portfolios indicate that you can realize good returns with stocks identified by the Covered Call Analyzer in flat or down markets. The DOW is down (2.7%) since these portfolios were opened on January 16. The strategy of the Analyzer is simple; find stocks that have calls that someone “in the know” is buying and driving up the premiums. Let's take a look at INT, which was identified by the analyzer for our $100,000 retirement portfolio last weekend. This is what the Analyzer suggested:

Buy 400 shares of WORLD FUEL SERVICES CORP (INT) at $23.96  (closing last trade price) and sell 4 call  Out-of-the-Money contracts of INT1020C25 (Mar$25.00) at $0.70 (closing bid price) expiring on 3/20/2010. Cost is $9,604, and income from sale of the calls is $264 and includes your commissions.  Annualized return if called is 87%.

This was the headline yesterday:

World Fuel Q4 earnings up 18.4%

The stock shot to $26.42.

Would you have found this opportunity without the Analyzer?

February 20, 2010

We are off to a great start in 2010 after only one month. As you see from the table at the right, both of our portfolios are up substantially. Our Stocks-to-Consider Lists were only slightly above the S&P 500 (which was down 2.4%). The picks we made from these lists were very good. Our $10,000 Aggressive Portfolio is up 14.2% in only 35 days. Our $100,000 Retirement Portfolio is up 3.2%, which would be a 7.2% return if you include the $4000 taken out as income-$2000 in January and $2000 in February.

The Conservative picks showed good returns when the lists and portfolios are taken collectively. Our Aggressive Stocks-to-Consider List from January 16 had 10 of the 20 stocks dropped below their get-out price (-15%) and were sold. The remaining 10 stocks were able to eke out a 0.1% improvement over the S&P 500. Our Conservative Stocks-to-Consider List and only one stock sold at the get-out price and ended up 4.3% above the S&P 500.

Our $10,000 Aggressive Portfolio closed January up 6.5%. We have rolled over one risky stock from last month (SIGA) and added another (ITMN) this month for this portfolio in our “Latest Updates”, which our subscribers can see. We are taking advantage of very large premiums identified by the Analyzer. You need to understand that this is an aggressive portfolio and we are taking some risks. We feel we have some cushion with the 14.2% already realized this year for this portfolio. We will know how we did on March 20.

February 12, 2010

I am changing my description for the markets. This week has been “toppy choppy”!!! The Analyzer has maintained good returns for our two portfolios, as can be seen in the table to the right. Both the $10,000 Aggressive Portfolio and the $100,000Rretirement Portfolio are green, while the S&P 500 is red (5.3%). Actually the retirement portfolio is doing better than the Aggressive Portfolio if you consider the $2000 that we took out for income on January 16. I continue to maintain that we remain conservative in this “toppy choppy” market.

I know we recommend the Analyzer should be run on expiration weekend. That does not mean you should not run the Analyzer at other times. I run it every day, just to make sure our website is working properly. When I ran the Analyzer today, Intermune (ITMN) popped up as the number one buy/write on the "high or No PE" Consider page. So I pasted it as our example above. I actually found ITMN the first time on February 3. I bought the stock at $17.73 and sold the March 20 calls at $4.20. WOW!!! The stock price and the call price has dropped off since I purchased and sold during this "toppy choppy" last week. I am taking a RISKY gamble here. ITMN is going before the FDA on March 9. Does somebody know something?

I our conservative "stocks-to-consider" list included ARG. In this "toppy choppy” market, the price has blown right past the $50 strike price to over $60. We will just have to accept our modest gain and not be upset because the stock moved so well. Did somebody know something?

February 4, 2010

I have mentioned "toppy” in several of my Buzz’s in the last few months. This week is demonstrating that we are there. The markets are beginning to react with fear - most of it generated by Washington. Many were anticipating better unemployment numbers tomorrow, but they aren't going to get them. There will probably be an increase in the unemployment percentage.

It is more important than ever to have a strategy that identifies good resilient stocks.

In the last week the volatility index has shot up. This is primarily due to downward movements rather than upward movements. In the last few months, volatility has been low as the markets were moving up, but slowly. This week markets have moved downward - rapidly.

At this time, we should be looking at the conservative approach rather than the aggressive approach. Back on December 12, 2009, I said, "it is best to be on the conservative side". This is proving to be true.

If you look at our two January lists (Aggressive and Conservative) you will notice that 10 of our 20 Aggressive stocks have gone below the get-out price (-15%). These are much more volatile stocks and have moved down rapidly with downward volatility. Even with 10 stocks sold at the get-out price, the total Aggressive List down only 6.0%.

Only 1 of the 20 Conservative stocks has gone below the get-out price. The table on the right shows that our Conservative List and our $100,000 Retirement Portfolio (which is also conservative) are doing better, on a percentage basis, than the Aggressive List and the $10,000 Aggressive Portfolio. Also note that the Conservative Lists and both portfolios are doing better than the S&P 500, down 6.4%, as well as the DOW, down 5.7% and the NASDAQ, down 7.1%

Don’t forget the get-out rule – especially now!!!

January 28, 2010

“The Options Symbology Initiative (OSI) is an industry plan to change the symbology used in representing options listed contracts. The OSI is being coordinated by Options Clearing Corporation (OCC). As a result of this initiative, Investment Enhancing Systems will be changing its options symbology and begin disseminating the new equity symbology initiative”.

This sounds rather ominous, but the above is a quotation from our data provider. Actually the interpretation of option symbols should become a little easier. You may have already seen some changes in option symbols if you use Yahoo Finance or MSN Finance. These websites converted about a week ago. Interestingly, the symbols they are using are different from each other and different from the ones we will be providing with the Covered Call Analyzer. Our symbols will be in accordance with OSI and OCC. We will be preparing for the switchover this weekend and, if everything goes well, you will begin seeing the new symbols when running the Analyzer after the close on Monday, February 1.

Here is how new option symbols will look:

Old Symbol                                                                                          New Symbol

MW BX (Mens Wearhouse call at $22.50 expiring on 2/20/2010)               MW1020B22.5

QSW CV (Origin Agritech call at $12.50 expiring on 3/20/2010)                 SEED1020C12.5

QWA EG Aixtron call at $35.00 expiring on 5/22/2010)                             AIXG1022E35

As you can see, the old three letter symbols have gone away. In the new symbol, you use the stock symbol. Next is the year and expiration date (day and month). The month letters are being retained to identify if it is a call or a put (A to L are call months, M to X are put months). At the end of the symbol is the strike price in easy to read numbers.

We will continue to identify all the information previously provided by the Covered Call Analyzer as shown below:

Buy 200 shares of MENS WEARHOUSE INC THE (MW) at $21.64  (closing last trade price) and sell 2 call  Out-of-the-Money contracts of MW1020B22.5 (Feb$22.50) at $0.60 (closing bid price) expiring on 2/20/2010. Cost is $4,348, and income from sale of the calls is $107 and includes your commissions.  Annualized return if called is 167%.

Hope this all works as promised.

January 21, 2010