HE-WHO

They say good things come to he who waits! In some cases this is true. Although I don't believe in Buy-&-Hold these days, looking back at the handful of plungers (really bad losers that I recommended at meetings and to clients) they all came back. They include:
BP
UVV
TLT
VALE
CLF

Still, the overall return for DITM remains consistent - between 9 - 10% annualized. I wrapped up trades only opened in 2011, closed in 2012 - about the same number will be posted after Jan.1

TOTAL:

186.29%..

#TRADES:

20

9.31%

#months

121..

avg.mo. in trade:

6

		2012	DITM
DATE:	SYM	#MOS.	ANN.%
5/24/2011	WM	17	5.66%
6/27/2011	BMY	9	9.09%
8/20/2011	DIA	8	6.06%
8/20/2011	MAT	7	8.56%
7/21/2011	LO	7	16.00%
9/16/2011	PM	5	13.77%
10/12/2011	COP	4	12.33%
10/25/2011	EPD	3	5.56%
10/26/2011	LLY	4	9.65%
11/1/2011	INTC	2	15.75%
11/28/2011	TAL	3	13.36%
12/1/2011	KMB	9	10.13%
12/1/2011	SDRL	9	10.13%
12/5/2011	MRK	3	9.55%
12/16/2011	NUE	4	17.72%
12/27/2011	DOW	3	22.47%
5/10/2011	TOT	8	9.37%loss
5/16/2011	CVX	8	10.77%
5/20/2011	SVU		8.9%loss
5/20/2011	NOC	8	8.00%

HEDGES GET TRIMMED

Hot off the Bloomberg airwaves: the average Hedge Fund has returned 1.4% year-to-date, the third year of gross underperformance. Legendary John Paulson's funds are mostly down 20%, while Steve Cohen (SAC) is up 9% (and undergoing an SEC insider trading investigation).

For the record, the S&P 500 is up 12.7% so far, with its ETF - the SPY- up 13.6%. The Nasdaq Composite, despite AAPL falling from the tree, is up 14.6% as of today, with hopes of more the rest of December.

Despite the scare of higher dividend taxes in the near future, here are some interesting facts garnered mostly from Barron's this week: per Sam Stovall, taxes to be on dividends ( ordinary income) are the same as on Bonds! So far, since November 7, there have been 160 "Special Dividends" - my advice, buy them AFTER the ex-date, so the stock price will have dropped, increasing dividend %. 50% of dividend stocks are in tax-deferred accounts anyway. 

A very interesting chart by Ned Davis (NDR) shows that, paradoxically, stocks do much better in decades (since 1930) where taxes on dividends are higher! The worst decade for stocks - the only negative number at -1% - was the past decade; the Depression years - 1930s- earned +.3%. The best was the 1950s, up 19% when taxes were 91%!!!!

In the past I've mentioned the investment strategy that I've been almost exclusively testing and using for my entire retirement funds (because of its safety and performance). Called the DITM (deep-in-the-money) covered call plan, as of  the November close, my small IRA account ( a microcosm of DITM with strictly 5-6 stocks and cash)  is up 8.21% YTD, or 9% annualized through December. Considering the safety net of selling calls well below the BUY price, to ride through Volatility, and the consistency of year over year @9-10%, it has proven a winning strategy - especially since that IRA continues to make all-time (adjusted for prior withdrawals) highs. 

What is most surprising is that my portfolio is overweighted in Energy and tech stocks (MCHP, QRE, INTC, WMB,  PWE, PGH, VNR, ERF, et. al., some of whom are currently slightly "under water". Hopefully they will all rise before expiry and be called away for 100% of expected return - or will have normal covered calls (above the then existing price), receiving a higher intrinsic Call value and 3% or more dividends (more since the stock has fallen!).

Caveat - since the year end is seeing possibly very volatile times, and DITM does have as its only flaw the threat of a Bear market (20% or more), it is prudent to spend a few $$ for downside protection - either with puts, put spreads, or Inverse ETFs.  

For more on investing, please visit (and Subscribe to):

http://www.examiner.com/stock-market-in-san-francisco/brent-leonard

RAPPELLING THE CLIFF:

If PRO is the opposite of CON, what is the opposite of PROgress?
Even Bowles and Cranston are leery of avoiding the Jan.2 deadline, and the dividend tax hike is taking its toll, as well as yearend institutional window dressing of funds.

The DITM portfolio is nervously, but only slightly, under water - so I am holding onto all my positions at this level. I expect (as with today's Thanksgiving tongue-biting appeasement by both parties- why do they call them parties?- ) that stocks will rally before Dec.31.

Still, the only real flaw of DITM is a Bear market, of which there have been either 1 or 2 each decade since 1900. Tomorrow I give a talk on hedging for this possibility to the S.F. Options Group.

November option expiry only saw one Call expiring - others have been rolled out- as is the case with WMB. I rolled down a call from 30 to May 29 (after rolling it up from 28 earlier. If called away then, it will have been a 14 month hold, for an (annualized) gain of 12.35%. WMB still looks like a stable stock in a good Sector.

Although VNR and PWE looks exceptionally ugly, I sold puts today to take on more stock before their ex-dividend date. 

NICE QUICKIE!

Despite a January Call sold on AHGP ( Alliance Holding) - it was called away along with Mitt Romney.  Annualized for the 3 months holding, I received 14.19%.
Carly Fiorina summed up the future pretty well last nite - Same-old,Same-old. Dems in the Pres. and Senate, Repubs with the no-tax pledge in the House - looks like a lot of the Fiscal Cliff might happen- Obamacare, etc. I would be hedged or out of the markets for 2013-14, even with DITM.

ALL-TIME RECORD HIGH!!!:

It has been awhile since the last update, with seasonal vacations taking priority. But during that spell the DITM-model "small" IRA set a new high (adjusted for withdrawals before DITM started). This, despite 3 of my 6 current positions slightly under water with October's malaise - while taking dividends and rolling out call positions.
Most recent was the "calling" away of APL before the next dividend. Annualized return after exactly 6 months was...23.88%. This helps make up any rare plungers such as Vale, CLF, et.al. With well over a hundred trades in the past 3 1/2 years, only a handful of these plungers (BP, UVV, come to mind) lost money, with a couple I could have ridden out.
APL, with a cost of $7169 in May 1 (200 shares) returned $810 in call premium and $224 in dividends, for  a net of $856 (divided by 7169 to annualize). Not bad considering the safety net of the lower call. 
Other callaways were QRE for 14.876% and LINE for only 8.24%; IRM was only 5.6% but HUN gained 40% (annualized) over a 3 month holding.
With the sideways markets there have been mostly rollouts, so not enough data to provide a recap of 2012 yet. Stay tuned.

A HEDGED DITM TRADE:

J.P.Morgan goes ex-dividend October 3 at just under 3%, with a nice "extrinsic" call premium to lock in. Adding to the 10% return is a Credit Ratio Put Spread (2:1) to almost eliminate any losses until next March.

                        DITM: (DEEP-IN-THE-MONEY) COVERED CALLS

Stock: J.P.Morgan (JPM) - $41.40

Buy 100 shares - $4140

Sell 1 March 38 in-the-money call option at $4.60 ($460)

Receive 2 dividends at $30 each (ex-dividend dates Oct.3, Jan.3)

Stock called away in March (5 months) at $38 ($3800)

COST                                                 RETURN

4140                                                    460

                                                             60

                                                            3800

4140                TOTAL                      4320

                        NET RETURN           180

% RETURN: (180 DIVIDED BY 4140): 4.35%  over 5 months, or 10.44% over 12 months (annualized).PLUS a Safety Net of over 3 points to $38. If stock (over all market) starts to weaken, employ this hedging strategy - must have Spread Option Approval Level:

Buy 2 March 34 puts at $.90 (180)

Sell 1 March 38 put at $1,80 (180), for zero cost.

Worst possible scenario: JPM drops to $34 (anything below is frozen); Long 34 puts expire worthless, Short 38 put is exercised - take on 100 JPM at 38 ( loss is $400 minus $180 return -see above).  Max loss $220. Do a DITM withSept.31 call; next ex-dividend date: April 3?.

SPECIAL SITUATION:

There has been talk in the media that many companies will be issuing special dividends before year end to avoid the possible Fiscal Cliff raising of the dividend tax. This can be good or bad, for DITM, depending on the size and nature. As we found out awhile back, sometimes it can affect the option price as well - if not, the extra dividend comes out of the part that you "pre-sold" by the ITM call!!
Also, the DIA, while not paying much, pays higher dividends in Nov., Dec. due to which stocks of the Dow 30 go ex then.
I'm looking also at JPM - A rated by Schwab, only less than 3%, but nice call premium.
For a real flyer, check out ALSK, going ex tmrow. risky (don't try with milk money) but looks oversold.
LOL

ANOTHER HOME RUN!:

Back from another vacation, I found three stocks (ETFs) called away - at, below, and above average returns:
Iron Mountain (IRM) was a short hold, which had a warning by Barron's, so glad to see it go - Bought last June at $6709 (with comm.), received 1 dividend $54, ITM call premium was $758, stock called at $5991 -net only $94, or 5.60% annualized at the three months return.
SDY, the dividend ETF was better at $10847 cost, $90, $778, and $10,191 returns (see above) for $212 net, or 7.82% ann.
The home run, including a sold put last Jan., was SCCO. which is better since it was 8 months term - 16.96% ann., with put premium included. These are more frequent than losses, so help to mitigate any possible losses.

VALE OF TEARS!:

Just as I was about to take a rare loss in VALE SA - the stock I recommended in a talk to the SF Options Group last Spring - industrial commodities and Vale did a turnaround after a 50% drop. I considered letting my Sept. 20 call expire 0, then noticed it is giving an October dividend, so I rolled out to Dec. to capture it, plus nice premium. Results YTBD.

Since I am going out of town before expiry this weekend, I also rolled out my KKR, took a DITM flyer on PGH (monthly dividends), PWE, and a low yielding DIA...

10 PERCENTERS:

Recharged after a fantastic seaside vacation, I came home to find my vacation paid for by a couple 10% (annualized) takeaways:
MAT - Mattel Inc. was called away by its Oct.20 29-strike call on Aug. 24. for a 10.92% return.
STX -Seagate, which has a nice call premium, was called away in early August for a 16.45% annualized sum. (Correction - in a previous post I erred in the net profit - not 23% as stated!).
SDRL - Seadrill was just called this weekend, as with the others - the day before ex-dividend date. SDRL was an unusual ROLLUP with a special dividend, going back 9 months. It was called away ABOVE my Buy price for a 10.13% yield.

With a positive year end anticipated, I am ready to reinvest fully is some great DITM stocks.

ANATOMY OF A LOSER?:

 It is with relative peace of mind that I go on vacation next week with only 2 of my 25 existing DITM positions "under water", thanks to the upward bias of the overall market (due to Inflation, survivor bias, growth, etc.).Although it is the least desirable direction (except, of course, for the Black Swan, or Bear Market that occurs once or twice a decade - since 1900), the rally does provide a cushion for existing trades, although it makes new entries higher priced, lower in dividend %, and usually lower Implied Volatility. 

Laddering positions month to month is always desirable for diversity of income payment as well as risk. In protracted stock and/or market declines (the opposite of rallies), it is possible to "step down" positions. Such was the case with Waste Management (WM), a long term holding:  

http://www.examiner.com/stock-market-in-san-francisco/brent-leonard

My number one source for DITM candidates has been Seeking Alpha, so I was elated that they accepted my writing for them - in columns and Instablogs. It is possible that this blog may migrate over to them at some point.

Hopefully September will be a positive month for the market, although historically it is the worst one of the year. In Presidential Election years, for the past 28 (since 1900), the market has risen whether the Incumbent wins, loses, and all 28 combined years. According to the Ned Davis chart, the real divergence occurs after October 1, in the case where the Incumbent is to lose - the market tanks dramatically and remains there for the rest of the year! 

23 SKIDOO!! :

Schwab called today to inform me, per usual, that a stock had been "called" away - Seagate Technology (STX) - it was called on Thursday, August 9 since its ex-Dividend date is the 10th. The Call was a Sept. 26, so more than a month compression - the annualized yield (after 4 months holding) is 23.2%. Slightly better ! than MMFs .01% or Treasurys, with less risk. STX is at $33 and climbing. Actually, the yield was more like 16% after finding an error!
Also paying today was QR Energy, which was traded recently with a November call. QRE went ex-D on July 26 with a 11.1% dividend yield, and $.35 extrinsic premium (enough to make the trade worthwhile if immediately called). Hopefully the October 26 dividend will be paid, or the call will be rolled forward to Feb. 2013, depending on future price action. The chart is a typical Wyckoff selloff and Trading Range, enhancing the dividend.
So far this year, despite a lousy 2nd Quarter market, and a rare loser - SVU - the small model IRA is on a 8.6% annualized pace, about even with the S&P 500, without the unhedged risk. BTW - this pure proxy account for DITM is making new all-time highs while the markets are not.
The Ned Davis Research chart, which I wrote about in my Examiner.com column: 

http://www.examiner.com/stock-market-in-san-francisco/brent-leonard,

shows that since 1900,  all markets tend to rise into Oct. 1, with the overall trend, and the incumbent-losing trend continuing up until year end - only with the incumbent (Obama) losing, does the market tank precipitously in mid-October, never to rise for the balance of the year.

OUTHOUSE TO PENTHOUSE:

The most recent activity in my DITM was outwaiting Waste Management's latest foray into the dumper- from its high  near $40 in 2011 to $27 a few months later.  My trade was an egregious example of how to make a loser become a winner, while earning money doing it. I bought it in May of 2011 at $38.40 and sold the 36 ITM Call 6 months out; as it flushed its way downward, I "stepped down" each expiry until finally this week selling the 32-strike for October '12. If called away then, my net will be $430 instead of a loss of $1200 (200 shares).
Other calls that expired worthless in July were MCHP, ETN, and AYR, and if this recent rally pops them above my previous strike price, I shall step down on these as well.
With another month almost over, and with the recent two day rally popping almost all my position above water, my small IRA - the pure microcosm of DITM with no recent deposits or withdrawals- just hit an all-time high again! Now at $41,450, it has risen over $10,000 since my DITM strategy started in May of '09- up 33%. Not bad for a conservative, safety-net strategy designed to beat zero interest rates.

OPTION EXASPIRATION:

Option expiration Saturday caused a lot of activity in DITM. My NVS "annual" dividend finally rose above the call to get called away 5 months later ( I was hoping for 1 or 2). Still, the annualized return was over 10%. JNJ getting called away was not as lucrative, but better than MMFs, at 5%.
Several stocks had options slip below the call-away strike and expired worthless: MCHP, ETN, WM, SSO, and AYR. (These are not recoms).
 I'll wait for an UP day and write the same call ABOVE the stock price and accumulate the same dividend, call premium, and hope to get called later.

UPDATE:

Over the past 3 weeks, not much activity has been needed, as I am still fully invested. Action that did occur was Verizon called away - it has been on a tear lately so rolling over was not an "option".
Although rising stocks provide a cushion for stocks held, they are a negative for starting a new position - however, there are plenty of others out there. I also did a Buy/Write on Dow, and more recently QRE energy - a nice dividend with a bit of call premium. This Friday may produce some available cash, although mostly I shall be rolling out the calls (9 positions expiring).
Analysts are complaining about a "dead money" sideways market, so it is nice to be earning $$ every day - either through a laddered dividend payment or decay of the call option (theta).
Especially having a safety net that earns money (DITM calls), although I still watch the market like a hawk!
I just recapped not only the past 6 months in my small IRA - the purest DITM with no GNMAs, MRD (req. distr.) or contributions (retired). As I reported earlier, only a couple of actual trades this year ( including falling off the "CLIFF" CLF). Still, results from when I started the DITM in May of 2009 (42 months) this DITM proxy has earned @7.7% a year , or 0.64%/month. This included trial-and-error and a learning curve ( annual dividends, selling puts, etc.).
The Chronicle just reported that U.S. families from 2007 to 2011 lost $11T in wealth, or 40% of their total assets.
Best estimate for the rest of the year is positive - based on valuation, cycles and seasonality; see more on Election years for incumbents at my Examiner.com column:

http://www.examiner.com/stock-market-in-san-francisco/brent-leonard

Extremely crude drawing available on demand!

FOREIGN TAXES:

One of the great resources for finding stocks with dividends (and much else) is the free website: SeekingAlpha.com. One can get on its emailing list for Investing For Income and get daily ideas, reviews, etc.
Reproduced below is a partial column from Richard Shaw - showing

Foreign companies with zero country withholding:

Ticker Company name  Country:

YPFYPF SA (ADR)Argentina TEOTelecom Argentina S.A. (ADR)Argentina TKTeekay CorporationBermuda PREPartnerRe LtdBermuda NATNordic American Tanker LtdBermuda FROFrontline Ltd.Bermuda MRVLMarvell Technology Group Ltd.Bermuda ALTEAlterra Capital Holdings LtdBermuda ENHEndurance Specialty HoldingsBermuda AXSAxis Capital Holdings LimitedBermuda GLNGGolar LNG LimitedBermuda AHLAspen Insurance Holdings LtdBermuda AGOAssured Guaranty Ltd.Bermuda SFLShip Finance International LimBermuda LAZLazard LtdBermuda TGPTeekay LNG Partners L.P.Bermuda SDRLSeadrill LtdBermuda TOOTeekay Offshore Partners L.P.Bermuda VRValidU.S. Holdings, Ltd.Bermuda BIPBrookfield Infrastructure PartBermuda TGHTextainer Group Holdings LtdBermuda TNKTeekay Tankers Ltd.Bermuda ELPComp. Paranaense de EnergiBrazil SIDComp. Siderurgica NacionalBrazil BAKBraskem SA (ADR)Brazil ABVCompanhia de Bebidas dasBrazil VIVTelefonica Brasil SA (ADR)Brazil GGBGerdau SA (ADR)Brazil UGPUltrapar Participacoes SA (ADRBrazil PBRPetroleo Brasileiro SA (ADR)Brazil CIGCompanhia Energetica MinasBrazil FBRFibria Celulose S.A. (ADR)Brazil BRFSBRF Brasil Foods SA (ADR)Brazil OIBROi SA (ADR)Brazil VALEVale SA (ADR)Brazil SBSComp. de Saneamento BasicoBrazil ITUBItau Unibanco Holding (ADR)Brazil BBDBanco Bradesco SA (ADR)Brazil GOLGol Linhas Aereas InteligentesBrazil CPLCPFL Energia S.A. (ADR)Brazil TAMTAM S.A. (ADR)Brazil CZZCosan Limited(ADR)Brazil BSBRBanco Santander (Brasil) (ADBrazil HLFHerbalife Ltd.Cayman Islands CIBBancolombia S.A. (ADR)Colombia ECEcopetrol S.A. (ADR)Colombia CHLChina Mobile Ltd. (ADR)Hong Kong CEOCNOOC Limited (ADR)Hong Kong FMCNFocus Media Holding Ltd (ADRHong Kong ASRGrupo Aeroportuario del SuresMexico CPACopa Holdings, S.A.Panama BTBT Group plc (ADR)United Kingdom ESVENSCO PLCUnited Kingdom GSKGlaxoSmithKline plc (ADR)United Kingdom RIORio Tinto plc (ADR)United Kingdom BCSBarclays PLC (ADR)United Kingdom VODVodafone Group Plc (ADR)United Kingdom ULUnilever plc (ADR)United Kingdom BTIBritish American Tobacco PLCUnited Kingdom AZNAstraZeneca plc (ADR)United Kingdom DEODiageo plc (ADR)United Kingdom HBCHSBC Holdings plc (ADR)United Kingdom BPBP plc (ADR)United Kingdom NGGNational Grid plc (ADR)United Kingdom AAUKY.PKAnglo American plc (ADR)United Kingdom PUKPrudential Public Ltd Comp.United Kingdom TSCDY.PKTesco PLC (ADR)United Kingdom PSOPearson PLC (ADR)United Kingdom CUKCarnival plc (ADR)United Kingdom WSHWillis Group Holdings PLCUnited Kingdom IHGInterContinental Hotels GroupUnited Kingdom BBLBHP Billiton plc (ADR)United Kingdom XRTXXyratex Ltd.United Kingdom RDS.BRoyal Dutch Shell plc (ADR)United Kingdom

FIRST HALF REPORT - NOT!:

As I reported recently the closed trades from 2011 (opened in 2011), I was also going to post the same for the first half of 2012 - until I realized I only closed two trades: one being the dis-ass-ter of Cliff Resources (CLF), and the other profitable. Seems I've been rolling out positions into future months - mainly due to a sluggish market.
In Barron's this weekend, Buckingham of the Prudent Speculator (the late Al Frank's fund), who is also a Fundamental guru, named his most undervalued stocks - many of which, I happily state, are in my 24-stock portfolio: HAS, ETN,EXC,TOT,WM,AND NM. Food for thought. 

WHY I LIKE DITM INVESTING - LET ME COUNT THE WAYS!

The uglier the stock market gets, the more I like the Deep-In-The-Money Covered Call strategy. It has to be the #1 strategy for a FLAT or DOWN market.

Here are some reasons:

* When you buy a stock that pays a 4% dividend and at the same time (Buy/Write) sell a covered call 10% below the buy price, you are in a sense buying it at a discount! For example: Buy XYZ at $50 on July 1 and sell a call option to deliver the shares at $45 in January 2013. The call should be priced around $6 ($5 for the amount that you are losing by selling it lower - Intrinsic Value; plus $1 (Extrinsic Value) for allowing the call Buyer to take the stock at $45 no matter what the price of the stock is in January). XYZ pays a dividend of 4% per year, or $.50 each quarter, with the first ex--dividend date within a day or two of your purchase.

Since you, in essence, paid $45/share or $4500 for the stock, your dividend percentage is 4.44%, not 4%!

 * Much like a CD or Bond, you know pretty much what your return is going to be - with the stock's Appreciation no longer a factor - so it can go up to $55 or down to $46 and your return is the same. With all this tremendous volatility in the markets due to economic conditions and  High Frequency Trading by computers (70% of market Volume), the $45 is a Safety Net allowing you  to sleep at night while other owners worry what the next day will bring, and whether they should Hold or Fold.

* If the stock rises, so does your margin of safety - and the stock may get "called" away early, increasing your % return by compressing the time. The combination of dividends and call "premiums" historically in extensive testing has steadily averaged an "annualized" 10% - fully invested and extended for 12 months at the same ROR -rate of return. You will lose any upside price of XYZ (rare these days), but still earn what has been the historical average: 10% for over 100 years. Probably less, since the last decade has seen zero return, besides dividends.

* If the stock remains the same- $50- ( winds up the same at expiration - January), you can just sell the next call - 6 months hence: July 2013 at $45 strike. Minimal monitoring.

* If XYZ works its way down to $45 by January - better yet! The call option expires worthless (no need for anyone to exercise it and take away your stock at $45 when they can buy it for $45). So you can "step down" selling the next call option at $40, making the same dividend - $2.00-  now earn 5% instead of the previous 4.44% or 4%. Additionally, when a stock drops the options "Volatility/Price" rises - witness the VIX in a down market.

* If the stock actually goes below $45 and stays there in January, you can write/sell the same covered call in the normal covered call fashion - above the stock price- again, at the $45 level, and wait for the stock to rebound - which it usually does. You are less likely to get "shaken" out just as the stock bottoms out.

* If the XYZ and/or the market goes into a BEAR phase - historically 1 or 2 times per decade since 1900- it is possible to lose some money, but much less than someone just holding stocks or an Index fund. Having the Safety Net gives one time of warning to hedge any or all positions - by using inverse ETFs, put spreads, etc.

* Laddering. Just like Bond portfolios, it is advisable to spread out ex-dividend dates, pay dates, and option expiry dates. It not only spreads the Risk by closing out mature positions cheaply, but provides a steady income each week/month from quarterly dividends and call-selling.

* Finally, with experience your returns should even get better. If you find  a stock that you like - dividend over 3%; calls with "juicy" extrinsic premium, and a stable trading range along with good fundamentals and market/sector outlook - but the ex-dividend is still weeks away- you can sell a put or put spread to take on the stock. This not only provides good income, but alerts you to the upcoming ex-dividend date. One idea that did not work out as well was to DITM stocks that only pay Annual dividends! If the stock drops, you cannot wait for the next (quarterly) dividend to bail you out ( next year?), plus most are foreign stocks that may have their own taxing authority.

2011 UPDATE:

As we near the end of the first 6 months of 2012 it is time to report the results of DITM trades  that were opened in 2011 and closed out in 2012. That amounts to 18 trades; total earnings were $6626 and the 2 losses were $1035. Average holding time: 5 months.
Annualized % of wins only: 11.6%
Annualized % of wins less losses ( arbitrary number since you don't keep annualizing/reinvesting losses):9.3%.
Just about where every other measurement of DITM has been for over 3 years.
I was going to also present trades opened and closed in 2012, but of the 24 existing positions only 2 have been closed out YTD. This includes one win - TLT- and the Big Loss of CLF, which was finally closed out at the low trade of the year ($44.50)- it is now $51. The 24 current trades are close to ATM (at-the-money).
At expiry, positions above the pre-sold strike will be called away or rolled out, if profitable.
Positions ATM can be rolled DOWN 5-10%, resulting in 100% profitability, and higher dividend % due to lower cost basis (sans loss of principal).
Positions just under strike will probably have the same strike call sold ABOVE the stock price, a la normal covered call strategy - hoping to get called away 4-5 months hence.

DOWN IN THE VALE:

Except for very special circumstances it probably is wise to abandon the capture of Annual Dividends with a DITM covered call. Paradoxically what rewards one for getting the whole year's dividend up front, penalizes them if the stock declines (in a bad market or bad sector- or both). So with VALE, with the call expiring this week, since I only get charged for 1 commission on a rollout, I rolled out and down to Sept. 20 from the June 22. Not counting the minor loss, the rollout nets about 18% annualized. If VALE rises to 20 I can consider letting it get called away, or rolling UP.
 I was certain that if I bailed out of CLF it would V-Spike up without me, but I was wrong even here. I intend to watch it until late July when it goes ex-D again. I am not one to be afraid to put my hand on a cold stove after burning it!
Lots of stocks going ex-D the 13th and beyond: HUN, TOT, caveat emptor!

OVER THE CLIFF!!:

As I explained in my weekly Sentiment blog today, this sorry market has more time than I have Retirement money, so I am exiting all positions in Cliff Resources, although Mike Santoli in Barron's recommended it, as did other sites (several major brokerages now downgrade it after a decline from $101 to 45!.DOH!
This was a true, but unsuccessful, test of DITM - although I'm sure it will rally at some point before Oct. From my entry point of $70/share (200), to $45, had I only bought the stock I would have lost $5,000. As it was, with Call premium, dividends (today), puts and put spread hedging (on vacation), the loss was only half that.
  

DITM TOP 20

DITM	TRADES		ANNUALIZED
DATE		#	BUY	STOCK	DIV'D	CALL	TOTAL	ANN.NET
	SYM	SHS	PRICE	AMOUNT	AMNT	SOLD	RETURN	RETURN
2/23/2011	LO	200	79.71	15951	260	1686	614	46%
11/11/2009	NLY	300	17.8	5349	*0	241	133	45%
10/13/2009	NM	1000	1000	5009	60	802	844	40%	**
6/23/2009	BP	200	47.24	9457	168	1015	717	32%
3/3/2011	BTI	100	80.6	8069	266	214	217	32%
5/8/2009	HCN	100	34.09	3418	*0	700	273	32%
8/17/2009	BKS	300	20.05	6024	75	1090	434	29%
9/10/2009	SLX	100	50.21	5030	*0	593	354	28%
5/24/2010	CTL	200	33.57	6723	145	182	595	27%
12/27/2011	DOW	200	28.97	5803	50	888	326	22%
5/7/2009	GDX	200	36.7	7349	22	1468	1630	21%	**
3/23/2011	T	200	28.1	5629	*0	338	100	21%
7/14/2010	PFE	400	14.92	5977	*0	881	95	19%
1/11/2011	SI	100	118.72	11881	270*	1035	193	19%	***
10/18/2010	HCN	200	49.76avg	9961	276	400	706	17%
12/16/2011	NUE	200	40	8009	73	870	473	17%	****
12/2/2011	LO	100	110.45	11054	130	1464	1031	16%	**
11/1/2011	INTC	300	24.18	7263	63	895	286	16%
9/16/2011	PM	200	70	14009	154	448	804	14%
11/28/2011	TAL	200	25.77	5163	104	798	230	13%
*******************************************************************************************************************
*0: STOCK CALLED BEFORE DIVIDEND; CALL PREMIUM FORFEITED
**: CALL ROLLED OUT ANOTHER CYCLE
***: ANNUAL DIVIDEND
****: INCLUDES SOLD PUT