tag:blogger.com,1999:blog-36110809886411435232024-02-08T11:45:55.072-08:00Zero(In)ToleranceThe intent of this blog is to explain and exhibit the Deep-In-The-Money covered call strategy, with actual trading results and updates as they occur in the author's accounts. The strategy is the subject of the author's recent 2010 book published by Amazon entitled Zero (IN)Tolerance ($14.95), a must for those "FED" up with zero interest rate returns. It is also possible to obtain the updated eBook through all eReaders except Kindle -$8.95:https://www.smashwords.com/books/view/76362DITMcallshttp://www.blogger.com/profile/03827245710732948197noreply@blogger.comBlogger182125tag:blogger.com,1999:blog-3611080988641143523.post-30393026577252160382016-07-11T11:19:00.002-07:002016-07-11T11:19:57.385-07:00RARE POSTINGThe reason this Zero blog has been idle recently is that with the market virtually unchanged for the past 19 months, DITM positions are also the same, except for option rollouts. Mostly I have been following gold and hedges with UVXY (which decays like an option).<br />
<br />
NUGT is a gold triple strength ETF, 3 X the GDX gold miners. It is as volatile on the downside !! as the upside, which has leaped from around $20 (where I first bought it) to its current 160 level just within this year (6 months). Not unlike DITM, I have been walking up ITM covered calls, milking the huge IV (premium) at 26, 50, 60 and now 110. <br />
With the UVXY, I have recently been selling puts to take on this double-strength hedge, in case of a severe downturn in the stock market. This is the second longest Bull market, is in the danger cycle of the year, and the wrong sectors seem to be leading it. With the futures rollovers, however, it is a wasting asset, which, like the TVIX, go to near zero and do a reverse split.<br />
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Handle these with extreme care!! DITMcallshttp://www.blogger.com/profile/03827245710732948197noreply@blogger.com0tag:blogger.com,1999:blog-3611080988641143523.post-45082564464677449112015-07-14T09:56:00.002-07:002015-07-14T09:56:32.747-07:00BOOK 'EM DANOShades of Hawaii 5-0.<br />
I just closed out my Barnes 'n Noble Leap Strangle. It was going fine but in August they spin off some Education part - BNED, which makes options even messier (covered calls, puts). Nice profit for just over i year - 28+%. Plus the safety of having brought in $$ to hedge. (Does not include margin sequester for the put - only the stock cost.).<br />
Did take minor losses on CHK (oil) and FCX (copper) - as China sells commodities to raise cash for the $4T market loss (Their GDP is only $10T.DITMcallshttp://www.blogger.com/profile/03827245710732948197noreply@blogger.com0tag:blogger.com,1999:blog-3611080988641143523.post-89067788512883532502015-07-07T09:27:00.001-07:002015-07-07T09:27:15.089-07:00GOOD NEWS, BAD NEWSA couple of trades this week to avert disaster. The chart on Intel looks as bad as many dividend-paying stocks that are being sold now (per Barron's top 50 dividend payers were down 6%, bottom 50 are up 6% YTD). Plus INTC's future doesn't look to rosy. Sold the stock for a slight loss, but thanks to DITM and a put rollup, I made a profit overall of nearly 3% in 9 months.<br />
Not so good on my Leap Strangle of FCX , put on in Jan. of this year. Again, the future of commodities, along with global economies, looks longer term than expected - China, Europe, et.al.<br />
Overall loss was $1100 on 200 shares with the stock down over 6 points. Strangle saved me about $200, as I had to buy back the put much higher, and the dividend was cut.DITMcallshttp://www.blogger.com/profile/03827245710732948197noreply@blogger.com0tag:blogger.com,1999:blog-3611080988641143523.post-91038178861861377182015-06-08T12:45:00.002-07:002015-06-08T12:45:14.000-07:00TORPEDO AHEAD<h3 class="post-title entry-title" style="background-color: #f7f0e9; color: #4b6320; font-family: Helvetica, Arial, Verdana, 'Trebuchet MS', sans-serif; font-size: 19.1100006103516px; margin: 13px 0px; padding: 0px;">
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Another disappointing security was just sold, minimizing the loss with dividends and ITM calls: Century Tel (CTL).<br />Bought 200 shares at 40.54, and gave up today with huge Insider Selling (Form 4), despite B rating by Schwab and 5 star by S&P !! Sold at 32.28 ($1669 loss) ameliorated by $700 div'ds and calls sold, for a loss of $975. Better than just owning the stock and watching it drop.<br />Once again DITM not only enhances return, but minimizes losses.<br />Current positions include VZ, CVX, INTc, GM, GG, UVV, VNR (partially called away).<div>
<br /><span style="color: black; font-family: Arial; font-size: x-small;"><i>With record numbers of dollars coming out of Money Market Funds, mostly into the crowded trade of short term bonds, anyone who has a minimal knowledge of covered call options and/or an interest in hedging stock market exposure might want to check out: <a c283ac44d23b2="true" href="http://brentleonard.com/" style="color: #063e3f; font-weight: bold;" target="_blank">brentleonard.com</a> for an alternative strategy that is low-risk as well as highly rewarding.</i> <i>For those of you wanting more details and actual trading results, a new book is available for $14.95 at Amazon.com: <a href="http://www.amazon.com/Zero-Tolerance-Low-Risk-Alternative-Interest/dp/1450574769/ref=wl_it_dp_o?ie=UTF8&coliid=I3B4FNQVHM4P5Q&colid=RZC7N3VMO5GH" style="color: #063e3f; font-weight: bold;" target="_blank"><b>Zero (IN)Tolerance</b> </a></i></span></div>
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DITMcallshttp://www.blogger.com/profile/03827245710732948197noreply@blogger.com0tag:blogger.com,1999:blog-3611080988641143523.post-23450251014396922672015-01-30T12:06:00.001-08:002015-01-30T12:06:11.939-08:00NUGT updateHaving stayed with the triple strength GDX etf from my Buy price of $35 to below $10 !! , after buying back my 40 call, I just today resold a 2017 LEAP call - the 25-strike for $7; IV (Implied Volatility) is still @100. NUGT's underlying - GDX- is an etf on the best of gold stocks, so shouldn't go away like a bad stock. To me it appears oversold with juicy volatility - a good way to play an eventual gold rally.<br />
Another way is just to buy the GGN, yielding 11% while you wait - also oversold.DITMcallshttp://www.blogger.com/profile/03827245710732948197noreply@blogger.com0tag:blogger.com,1999:blog-3611080988641143523.post-31157959059704480062015-01-23T09:48:00.001-08:002015-01-23T09:48:19.081-08:00Hi, Ho, SILVERAlthough Volatility (VIX) is back - hopefully- and DITM will return to its 10% return, I still like doing the Leap Strangles when I find them. Especially with high IVs (Implied Volatility). Last November I put on a covered call on PAAS (Pan Am Silver) a Canadian company. I was leery of selling the put side, but after it fell from $16 to below $9 and started to rally, I thought it might be time to sell the other leg.<br />
<br />
Leap strangles are not Risk-Free ( I found that out buying the 3X gold ETF: NUGT which I bought at $35, and saw it fall to below $10, but it is working out with fine tuning). The numbers on PAAS are this:<br />
Bought 300 at $3220, sold a call (2017 at 12 strike) for $613; just now sold the put (10 strike also 2017) for $730; it should pay over 4% dividend before January 2017 - $338; and I hope to have it called away at 12 then ($3600). Profit over 27 months $2060 or 64%. Annualized over 12 months - 28%. Considering the safety of bringing in the $$ initially, plus the return, it looks good. The IV is only 50 - half the IV of the NUGT, which is over 100, on the puts and calls.DITMcallshttp://www.blogger.com/profile/03827245710732948197noreply@blogger.com0tag:blogger.com,1999:blog-3611080988641143523.post-16723337999058814912015-01-14T10:37:00.004-08:002015-01-14T10:37:37.366-08:00Timing Is EverythingStatistics show that mutual funds that outperform invariable underperform five years later - the same may be true of investment strategies. I started DITM in May of 2009, two months after the Fed-driven BULL market started in March '09, and was probably not the best strategy for that era, although for 5 years it did produce @ 10% with SAFETY.<br />
According to Schwab Research, the Bull market is far from over but could get pretty choppy for awhile, raising the IV (Implied Volatilities) of stocks and necessitating more hedging.<br />
<br />
Today I put on a trade of CQP - Cheniere - just below $30, with a June 28 call; should go ex-D end of Jan. with a nice dividend % and safety net (History record, not a recommendation!).<br />
<br />
As I have not updated DITM regularly, readers might want to "SUBSCRIBE" to my Examiner.com column, which has been regular on Mondays for over two years, with commentary on markets, Sentiment, Leaps and maybe more DITM: <span style="color: #888888;"> </span><span style="background: white; color: #222222; font-size: 11pt;"> </span><span style="font-size: 11pt;"><span style="background: white;"><a href="http://www.examiner.com/stock-market-in-san-francisco/brent-leonard" target="_blank">http://www.examiner.com/stock-market-in-san-francisco/brent-leonard</a>.</span></span><br />
<span style="font-size: 11pt;"><span style="background: white;">It is free with no obligation (occasional irritating commercials!). </span></span><br />
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DITMcallshttp://www.blogger.com/profile/03827245710732948197noreply@blogger.com0tag:blogger.com,1999:blog-3611080988641143523.post-68914032710575208162015-01-06T09:40:00.000-08:002015-01-06T09:40:00.303-08:00UGLY AVONNot a great way to start the year, but I was forced to cut short my losses in the LEAP Strangle on AVP (Avon) which has been circling the drain for years. At a 2013 high of $24, I bought the stock at $14.45 but had to give up at $8.70! Chart shows no hope of this major old company surviving. It is the first time I have lost money on both the stock and the options, not being protected by the Leaps in all other losing cases. Loss on 500 shares bought just last May was $2898 on the stock and $1158 net on both Puts and Calls - Totaling $3996 after $60 back in dividends -whoopee!<br />
Gold is starting to rally in 2015, but there is small hope there yet, with the $ so strong.DITMcallshttp://www.blogger.com/profile/03827245710732948197noreply@blogger.com0tag:blogger.com,1999:blog-3611080988641143523.post-76238682652855936882014-12-12T12:01:00.002-08:002014-12-12T12:01:46.878-08:00Game StoplossDespite aforementioned disappointment at the lower Volatility causing a switch after 5 years from DITM to the Leap Strangle strategy, I continue to test it in my small IRA, but with 1/2 of the funds in cash until the end of this downturn - which I expect any day, with an upsurge into NY Day and beyond. My Examiner.com column: <span style="color: #888888;"> </span><span style="background: white; color: #222222; font-size: 11pt;"> </span><span style="font-size: 11pt;"><span style="background: white;"><a href="http://www.examiner.com/stock-market-in-san-francisco/brent-leonard" target="_blank">http://www.examiner.com/stock-market-in-san-francisco/brent-leonard</a>, extols the virtues of 2015 technically and cyclically - feel "free " to read and even Subscribe weekly to it if you like. It is now in its third year, as the DITM is in its 10th.</span></span><br />
<span style="font-size: 11pt;"><span style="background: white;"><br /></span></span>
<span style="background-color: white; font-size: 14.6666669845581px;">A good example of why I like DITM as well as Leap Strangles for double digit returns as well as Safety! is the blood-letting in many metal and energy stocks, but also Gamestop - GME.</span><br />
<span style="background-color: white; font-size: 14.6666669845581px;">In my IRA I note that the stock is down from my buy price - $39- t just below $33 on 200 shares (normally a $1200 paper loss! According to my Schwab EDGE platform, having sold the 2016 40 strike (actually OTM when sold) , the profit on "milking" the premium is $1130 - so, adding $265 in dividends, the position is actually about even, if closed out today. Strangles work the same way, but add Sold Puts to the equation.</span><br />
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<span style="background-color: white; font-size: 14.6666669845581px;">Remaining DITM positions include GE and INTC. </span><br />
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DITMcallshttp://www.blogger.com/profile/03827245710732948197noreply@blogger.com0tag:blogger.com,1999:blog-3611080988641143523.post-16124332272667042422014-12-04T10:56:00.002-08:002014-12-04T10:56:32.327-08:00LEAP UpdateAs the new year approaches, and the 2nd anniversary of my LEAP Strangle strategy implementation I am starting to record the results great and not-so-great as the first batch -2015- are due to expire. With the opening of the 2017 Leaps this Fall, almost all Calls and Puts have been rolled (Out, up and Down).<br />
Today's rollout was on Ford (F) which was bought in January 2013 - 23 months ago:<br />
Cost: 200 shares at $13.69 : $2738<br />
Profit from dividends and options: $1330<br />
Current Price $15.83: $3166<br />
Profit if closed out: $1276, or 46.4%<br />
Instead I rolled out both Puts and Calls for $214 and $268, respectively- another $482. So if F stays UNCH until January 2017, profit is $1758 or 64% over 4 years, or 16%/year with no monitoring or fine-tuning.<br />
The best part is the safety net provided by funds brought in: there would be no loss unless F dropped below $7/share (dividends included).<br />
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Not so profitable have been my mistaken positions into Gold and Energy, which still have time to play out as they are rolled down and out.DITMcallshttp://www.blogger.com/profile/03827245710732948197noreply@blogger.com0tag:blogger.com,1999:blog-3611080988641143523.post-51286928367459605742014-10-28T12:30:00.000-07:002014-10-28T12:30:14.487-07:00BEENAWHILENow that we are through (hopefully) the volatile Sept./Oct. period and into the best 3 months of the year for the markets -statistically, I put on three recent positions for the Leap Strangle. I gave a talk last weekend to the San Francisco Bay Area Options Group on the results so far.<br />
The concept is high yield with money brought in from both OTM (out-of-the-money) options for immediate insurance, which decay over time.<br />
The Three trades were:<br />
<br />
<u> LeapYear #shares stock Px Amount Call Put</u><br />
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 384px;" x:str="">
<colgroup><col span="6" style="width: 48pt;" width="64"></col>
</colgroup><tbody>
<tr height="17" style="height: 12.75pt;">
<td align="right" class="xl24" height="17" style="height: 12.75pt; width: 48pt;" width="64" x:num="">2017</td>
<td align="right" class="xl24" style="width: 48pt;" width="64" x:num="">200</td>
<td align="right" class="xl24" style="width: 48pt;" width="64" x:num="">18.34</td>
<td align="right" class="xl26" style="width: 48pt;" width="64" x:num="">3677</td>
<td align="right" class="xl25" style="width: 48pt;" width="64" x:num="">366</td>
<td align="right" class="xl25" style="width: 48pt;" width="64" x:num="">490</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td align="right" class="xl24" height="17" style="height: 12.75pt;" x:num="">2016</td>
<td align="right" class="xl24" x:num="">500</td>
<td align="right" class="xl24" x:num="">6.84</td>
<td align="right" class="xl26" x:num="">3426</td>
<td align="right" class="xl25" x:num="">396</td>
<td align="right" class="xl25" x:num="">187</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td align="right" class="xl24" height="17" style="height: 12.75pt;" x:num="">2016</td>
<td align="right" class="xl24" x:num="">500</td>
<td align="right" class="xl24" x:num="">7.84</td>
<td align="right" class="xl26" x:num="">3929</td>
<td align="right" class="xl25" x:num="">941</td>
<td align="right" class="xl25" x:num="">1212</td>
</tr>
</tbody></table>
<br /><div>
We shall see in the fullness of time!</div>
DITMcallshttp://www.blogger.com/profile/03827245710732948197noreply@blogger.com0tag:blogger.com,1999:blog-3611080988641143523.post-77645509582681809022014-08-04T10:48:00.000-07:002014-08-04T10:48:07.485-07:00Zero Dark 2000In another futile attempt to breach the triple zero on the SPX the expected selloff last week was aborted today (so far) byt he old reliable McClellan Oscillator dropping below -50 Friday (minus 89!). August has not been very profitable the past three years, and the JASON (July-Nov.) period spells caution as well. A/D on the NYSE was terrible (-2288 net declines); Insider selling is still heavy, but steady - especially Gold, where commercial traders are huge.<br />
<br />
Monthly figures for ETF flows for June finally arrived, with increases in all, except bonds - margin interest again rose to almost new highs, which is positive for the market, via correlation.<br />
<br />
Here are the numbers:<br />
<br />
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 431px;" x:str="">
<colgroup><col style="mso-width-alt: 5376; mso-width-source: userset; width: 110pt;" width="147"></col>
<col style="mso-width-alt: 4242; mso-width-source: userset; width: 87pt;" width="116"></col>
<col style="mso-width-alt: 2925; mso-width-source: userset; width: 60pt;" width="80"></col>
<col style="mso-width-alt: 3218; mso-width-source: userset; width: 66pt;" width="88"></col>
</colgroup><tbody>
<tr height="21" style="height: 15.75pt;">
<td class="xl26" height="21" style="height: 15.75pt; width: 110pt;" width="147">Date></td>
<td class="xl26" style="width: 87pt;" width="116"></td>
<td align="right" class="xl35" style="width: 60pt;" width="80" x:num="41852">8/1/2014</td>
<td align="right" class="xl35" style="width: 66pt;" width="88" x:num="41846">7/26/2014</td>
</tr>
<tr height="21" style="height: 15.75pt;">
<td class="xl26" height="21" style="height: 15.75pt;">Indices:</td>
<td class="xl26" x:str="DJIA ">DJIA </td>
<td align="right" class="xl30" x:num="">16493</td>
<td align="right" class="xl30" x:num="">16960</td>
</tr>
<tr height="21" style="height: 15.75pt;">
<td class="xl25" height="21" style="height: 15.75pt;"> </td>
<td class="xl26" x:str="NAZ ">NAZ </td>
<td align="right" class="xl30" x:num="">4352</td>
<td align="right" class="xl30" x:num="">4449</td>
</tr>
<tr height="21" style="height: 15.75pt;">
<td class="xl24" height="21" style="height: 15.75pt;"></td>
<td class="xl26" x:str="SPX ">SPX </td>
<td align="right" class="xl30" x:num="">1925</td>
<td align="right" class="xl30" x:num="">1978</td>
</tr>
<tr height="21" style="height: 15.75pt;">
<td class="xl26" height="21" style="height: 15.75pt;">WklyVolume (Bshs).</td>
<td class="xl26">naz/ny</td>
<td class="xl30">9.9/3.6</td>
<td class="xl30">8.7/2.9</td>
</tr>
<tr height="21" style="height: 15.75pt;">
<td class="xl26" colspan="2" height="21" style="height: 15.75pt; mso-ignore: colspan;">Specul.Ratio
hi=bullish</td>
<td align="right" class="xl30" x:num="">2.8</td>
<td align="right" class="xl30" x:num="">3</td>
</tr>
<tr height="21" style="height: 15.75pt;">
<td class="xl25" height="21" style="height: 15.75pt;">Sentiment:</td>
<td class="xl25" x:str="put/call-CBOE ">put/call-CBOE </td>
<td align="right" class="xl30" x:num="">68</td>
<td align="right" class="xl30" x:num="">60</td>
</tr>
<tr height="21" style="height: 15.75pt;">
<td class="xl25" height="21" style="height: 15.75pt;">VIX>50-alltmlow=8.8</td>
<td class="xl25"></td>
<td align="right" class="xl30" x:num="">17</td>
<td align="right" class="xl30" x:num="">12.7</td>
</tr>
<tr height="21" style="height: 15.75pt;">
<td class="xl25" colspan="2" height="21" style="height: 15.75pt; mso-ignore: colspan;">Advance/Dec-NYSE..</td>
<td class="xl30">484/2772</td>
<td class="xl30">1503/1720</td>
</tr>
<tr height="21" style="height: 15.75pt;">
<td class="xl25" height="21" style="height: 15.75pt;">Weekly Net:</td>
<td class="xl25"></td>
<td align="right" class="xl34" x:num="">-2288</td>
<td align="right" class="xl34" x:num="">-217</td>
</tr>
<tr height="24" style="height: 18.0pt;">
<td class="xl25" height="24" style="height: 18.0pt;"> Cumulative:</td>
<td class="xl25"></td>
<td align="right" class="xl30" x:num="">161470</td>
<td align="right" class="xl30" x:num="">163758</td>
</tr>
<tr height="24" style="height: 18.0pt;">
<td class="xl25" height="24" style="height: 18.0pt;" x:str="Weekly ">Weekly </td>
<td class="xl25">NYSE hi/low</td>
<td class="xl30">260/191</td>
<td class="xl30">435/91</td>
</tr>
<tr height="24" style="height: 18.0pt;">
<td class="xl25" height="24" style="height: 18.0pt;">New Hi's/Low's</td>
<td class="xl25">Nasdaq h/l</td>
<td class="xl34">149/254</td>
<td class="xl30">201/145</td>
</tr>
<tr height="21" style="height: 15.75pt;">
<td class="xl25" height="21" style="height: 15.75pt;" x:str="McClellan ">McClellan </td>
<td class="xl25">Oscillator</td>
<td align="right" class="xl34" x:num="">-89</td>
<td align="right" class="xl34" x:num="">-31</td>
</tr>
<tr height="21" style="height: 15.75pt;">
<td class="xl25" height="21" style="height: 15.75pt;">McClellanSum</td>
<td class="xl25">.+750/-1000</td>
<td align="right" class="xl30" x:num="">287</td>
<td align="right" class="xl30" x:num="">599</td>
</tr>
<tr height="21" style="height: 15.75pt;">
<td class="xl25" height="21" style="height: 15.75pt;">Newsletter</td>
<td class="xl25">Inv.Intel -Bull:tues</td>
<td align="right" class="xl30" x:num="">55.6</td>
<td align="right" class="xl30" x:num="">56.5</td>
</tr>
<tr height="21" style="height: 15.75pt;">
<td class="xl25" height="21" style="height: 15.75pt;">Surveys</td>
<td class="xl25">Bear:-5yrs</td>
<td align="right" class="xl30" x:num="">16.2</td>
<td align="right" class="xl30" x:num="">17.2</td>
</tr>
<tr height="21" style="height: 15.75pt;">
<td class="xl24" height="21" style="height: 15.75pt;"></td>
<td class="xl25">AAII -Bull :wed.</td>
<td align="right" class="xl30" x:num="">31.1</td>
<td align="right" class="xl30" x:num="">29.6</td>
</tr>
<tr height="21" style="height: 15.75pt;">
<td class="xl24" height="21" style="height: 15.75pt;"></td>
<td class="xl25" x:str="Bear ">Bear </td>
<td align="right" class="xl30" x:num="">31.1</td>
<td align="right" class="xl30" x:num="">29.9</td>
</tr>
<tr height="21" style="height: 15.75pt;">
<td class="xl25" height="21" style="height: 15.75pt;">COT:SPX w/w</td>
<td class="xl25">large/small (net)k</td>
<td class="xl30">.3/5</td>
<td class="xl30">.2/6</td>
</tr>
<tr height="24" style="height: 18.0pt;">
<td class="xl25" height="24" style="height: 18.0pt;">COT:gold comm.hedg</td>
<td class="xl25">long-short.000</td>
<td class="xl31">(149k)</td>
<td class="xl31">(160k)</td>
</tr>
<tr height="21" style="height: 15.75pt;">
<td class="xl27" height="21" style="height: 15.75pt;">CEOinsider</td>
<td class="xl27">selling</td>
<td class="xl33">22:1</td>
<td class="xl33">44:1</td>
</tr>
<tr height="21" style="height: 15.75pt;">
<td class="xl27" height="21" style="height: 15.75pt;">off.&bd b/s.vs.</td>
<td class="xl27">10% holder b/s</td>
<td class="xl27">175:25</td>
<td class="xl27">175:20</td>
</tr>
<tr height="21" style="height: 15.75pt;">
<td class="xl25" height="21" style="height: 15.75pt;">3-box rev</td>
<td class="xl25" x:str="Bullish%- ">Bullish%- </td>
<td align="right" class="xl30" x:num="">74</td>
<td align="right" class="xl30" x:num="">83</td>
</tr>
<tr height="21" style="height: 15.75pt;">
<td class="xl30" height="21" style="height: 15.75pt;">US equity -ICI</td>
<td class="xl30">Fund Flows</td>
<td class="xl25">WeekDelay</td>
<td class="xl29">(1.4B)</td>
</tr>
<tr height="21" style="height: 15.75pt;">
<td class="xl25" height="21" style="height: 15.75pt;">MMF flows</td>
<td class="xl25">Change in $B</td>
<td class="xl34">(8.8B)</td>
<td class="xl34">(2.2B)</td>
</tr>
<tr height="21" style="height: 15.75pt;">
<td class="xl25" height="21" style="height: 15.75pt;">MargDebt- top (300M)</td>
<td class="xl28" x:str="monthly ">monthly </td>
<td class="xl28">464B</td>
<td class="xl28">MAY</td>
</tr>
<tr height="21" style="height: 15.75pt;">
<td class="xl25" height="21" style="height: 15.75pt;">ETF:mthlyEqty/</td>
<td class="xl25">Int'l/Bond-$B</td>
<td class="xl28">1116/440/274</td>
<td class="xl28">MAY</td>
</tr>
<tr height="21" style="height: 15.75pt;">
<td class="xl25" colspan="2" height="21" style="height: 15.75pt; mso-ignore: colspan;">2-yr
Tsy Yield: Inflation</td>
<td align="right" class="xl32" x:num="4.7999999999999996E-3">0.48%</td>
<td align="right" class="xl32" x:num="4.8999999999999998E-3">0.49%</td>
</tr>
</tbody></table>
DITMcallshttp://www.blogger.com/profile/03827245710732948197noreply@blogger.com0tag:blogger.com,1999:blog-3611080988641143523.post-20169110743760530502014-07-28T10:11:00.000-07:002014-07-29T09:23:49.672-07:00Endless SummerStill waiting for a meaningful correction, but could not resist a trade on Calumet (CLMT) - DITM covered call of Feb 30, with the stock at $33 (10% protection through the best months of the year - Nov.-Jan.<br />
Had to wait for it to go ex-dividend , which it just did. 8% plus some downward Insurance of a few pence.<br />
<br />
N.B. as of May 1 - 2014 , 4(closed) trades have netted 14% annualized; Including closed trades (8) started in 2013 - up 13.4%. No losses, but low Volatility (IV).<br />
<br />
Also covered in this blog is the LEAP portfolio, which offers more safety and yield by selling covered LEAP (longterm) strangles - out-of-the-money covered calls and puts. One can put on a trade an just let it stand for months (years), or fine-tune it for more yield and safety (cash brought in.<br />
In the latter case, I rolled my AA (Alcoa) puts upward and out to 2016 for a $300 gain, as the stock has jumped more than a double since I bought it. With the LEAP plan, although my covered calls of 2105 are at the 10 strike (now ITM) it will most likely be called away in January (rolling out deep in-the-money calls is seldom very profitable - extrinsic premium).<br />
2017 LEAPS should be coming out in October, but why sit on a way ITM put that sells for $.02??<br />
<br />
Finally, as an example of how DITM can act as a hedge as well as conservative yield-provider (consistently 10%), another trade rears its pretty head today. Just as an infrequent loss can be devastating (but less than just owning the stock) since one can keep from getting "shaken out" with the lower covered call, so can a pleasant outlier occur to the upside:<br />
<br />
This week Kinder MLP (KMP) was called away from my IRA after 6 months - with 6 months left on the January 2015 call!!! Very unusual, but happens if the buyer wants to exercise it way ahead!<br />
I bought KMP at above $80 and sold the in-the-money (ITM) call at 77.50; the stock immediately dropped 10 points, but I held on due to the June call, which became int the money again in June, and I rolled out to January '15. Called away at 77.50 I would have lost $300 - but with DITM (call premiums and dividends) I netted $437 after commissions, for a 10.85% annualized profit - right on its usual mark. DITMcallshttp://www.blogger.com/profile/03827245710732948197noreply@blogger.com0tag:blogger.com,1999:blog-3611080988641143523.post-70521928166644089622014-07-11T10:46:00.001-07:002014-07-11T10:46:05.368-07:00QUICKIEIn my latest DITM trade the good news for FCX - Freeport Copper- is that the annualized return, net of commissions, spreads, and other slippage, was 11% - too bad it only lasted 3 months! Buying it in April and having the August call (the 31 ITM) exercised on my, with the stock over $38 it was too ITM to be rolled out in time.<br />
<br />
Since this 200 share trade was in my small IRA, I shall probably do another DITM trade soon to keep this statistic "pure", not mingled with the LEAP Strangle plan, which I now prefer, with Volatility as low as it is these days.<br />
<br />
Per my Schwab account statement for the semi-annual 2014 period, what with above slippage and sloth, Reg T-3 (3 day settlement of funds, etc.) the IRA gained 3.40%, making it an annualized 6/80%, unless the VIX picks up, and premium returns.<br />
<br />
Keep the Faith!DITMcallshttp://www.blogger.com/profile/03827245710732948197noreply@blogger.com0tag:blogger.com,1999:blog-3611080988641143523.post-58471668298586729892014-06-23T10:26:00.000-07:002014-06-23T10:26:08.001-07:00Winner Winner, Chicken DinnerThis past weekend being option expiry (Saturday after the third Friday of each month), another stock was called away in DITM - since the Bull market increased the price of STX (Seagate Tech.) too high to roll out another six months. Of course the appreciation would have been nice, had I just owned the stock, but the comfort of the cushion was pleasant as well.<br />
<br />
Also nice to see was the overall profit for this 8-month holding period:<br />
200 shares were bought at $9,636, ITM calls were immediately sold for $1105, and dividend received were $258, for a total profit of $918, including the takeaway amount of $9191 (after all commissions). <br />
That amounts to 14.29% annualized to 12 months, making my 2014 total of 9 completed trades - 12% if annualized from YTD.DITMcallshttp://www.blogger.com/profile/03827245710732948197noreply@blogger.com0tag:blogger.com,1999:blog-3611080988641143523.post-50799605797936298912014-05-28T11:27:00.003-07:002014-05-28T11:27:50.972-07:00Semi Annual UpdateThose of you still tracking the DITM strategy, as an alternative to Zero Interest rates (stocks with safety and yield), a pleasant surprise after six months of 2014.<br />
Although the steadily upwards rise, thanks to the Fed ex Machina, has flattened option IV (volatility), which results in the price of the calls, after only 8 closed out trades in 2014 (not including rollouts) the results are in. With only one minor (-$57) loss, the average "annualized" gain was just over 10% - 10.22%.<br />
The last one, today, was a call-away of LO, which jumped so far a rollout was not do-able - too far ITM (in the money) for "extrinsic" premium in the call option. The best measure of volatility - the VIX- is now at a recent record low - sub-12 (11.51), which is a bit worrisome if one looks at the 1-year and 5-year charts of the VIX when it breaks down below 12!<br />
More data at:<br />
<i> </i><br />
<div class="MsoNormal">
http://mktsentiment.blogspot.com</div>
<div class="MsoNormal">
<span style="color: #888888;"> </span><span style="background: white; color: #222222; font-size: 11.0pt;"> </span><span style="font-size: 11.0pt;"><span style="background: white;"><a href="http://www.examiner.com/stock-market-in-san-francisco/brent-leonard" target="_blank">http://www.examiner.com/stock-market-in-san-francisco/brent-leonard</a></span><i><o:p></o:p></i></span></div>
<div class="MsoNormal">
<span style="font-size: 11.0pt;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: 11.0pt;">Despite a fool's errand of trying to time the market, I'm waiting through the seasonally weak June to enter new positions. Possible candidates could be - CSCO, INTC, KKR, STO, even AAPL7 - which is the 10 share lot of APPLE.</span></div>
DITMcallshttp://www.blogger.com/profile/03827245710732948197noreply@blogger.com0tag:blogger.com,1999:blog-3611080988641143523.post-64121071998614278382014-05-21T12:08:00.001-07:002014-05-21T12:08:39.023-07:00LEAP OF FAITH<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
"Into every life a little rain.....". Or - Why I
like hedging stocks with LEAP options (Longterm Equity AnticiPation) calls and
puts that expire in January of future years - 2105, 2106, etc.</div>
<div class="MsoNormal">
The strategy involves buying a stock of better than average
quality ( A or B in the Schwab rating system), with or without dividend, with a
price usually between $8 and $20; then SELLING a LEAP put and call, out of the
money (called a LEAP Strangle - the same option price would be a Straddle-
using the decay of the option to bring in money to hedge any losses. The
trade-off or liability of selling these options is - the call limits any profit
above the higher OTM (out of the money) "strike" price; the lower OTM
put makes one liable to take on more stock, for which sequestered money must be
set aside - Cash in an IRA, margin from stocks in a taxable account.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Here is an example of a major loss in one of my accounts,
which should be offset with the double-digit returns of successful LEAP trades:</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Just Energy was bought in November of 2013 at just under $7
( 1000 shares for $7000 plus commission). It recently tanked from just above $8
to its current $5 level, a $3000 drop, or loss - $2000 from its original price.</div>
<div class="MsoNormal">
However, by selling 10 calls at 7 1/2 for 2016, and 10 puts
at $5, much of this loss was wiped out.</div>
<div class="MsoNormal">
The call was bought back at: $312; it was sold originally
for $1,042 (all commissions included). At the same time the 5-strike put was
sold at $1.55 each - 10 cost $1,533. </div>
<div class="MsoNormal">
Due to time decay of the options , the put can be bought
back at $1.20 ($1,200) for a $333 profit, despite JE's dramatic fall. The stock
can be sold ( a stop loss has been put in at $5.70) for $5700.</div>
<div class="MsoNormal">
So instead of a $2000 loss ($3000 from its top), the numbers
are:</div>
<div class="MsoNormal">
Call: $730</div>
<div class="MsoNormal">
Put: 333</div>
<div class="MsoNormal">
Dividends: 6 times $50 (after foreign taxes): $300</div>
<div class="MsoNormal">
Sold stock: $5700</div>
<div class="MsoNormal">
Actual profit (if JE goes lower and gets stopped out) +$63 -
not bad for a Torpedo!!</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
As for the total LEAP portfolio in this account (6 stocks
including JE), as of May 1 - six months into the strategy ( excluding NOK,
which was bought a year earlier), it is up 12%, or, if annualized for 12
months, using a 5 month average holding period, 29%. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
*****************************************************************</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
As for MY personal accounts using LEAPS, also stating with
one position in Dec. 2012, adding ladderlike monthly up to over 20 positions
currently, I recently closed out my first and only position - as it turned out,
prematurely - Trina Solar, a rather risky, Chinese company that looked
technically weak, declining fro its recent high of over $18/share to $10! Today
it jumped up over $3.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Still the potential "Loss" was ameliorated by the
LEAPS, as follows:</div>
<div class="MsoNormal">
Bought 500 shares in August of 2013 just under $9 a share
($4500), selling a 10-strike call and a 7-strike put. When TSL jumped from 8 to
18, I tweaked, or fine-tuned it by rolling both the put and call higher and
farther out in time - 2015 to 2016 for more "insurance" money, which
I returned when it dropped to 10.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Bottom line, the numbers went:</div>
<div class="MsoNormal">
Stock cost: $4500, sold at $10.45 for $5215 - net $715</div>
<div class="MsoNormal">
Unfortunately, by buying back both puts and calls after a
downturn, the IV (Implied Volatility - which is the key in deciding what to
sell - or buy back) was so high, I
actually paid more to close out the options - $450- despite the rollup, out and
time decay !! Another negative of TSL is the wide Bid-Ask spread; wise to avoid
in case of buybacks.</div>
<div class="MsoNormal">
So after holding TSL
for 9 months (no dividends) my net profit (no loss) was $260, or 5.8% -
annualized if held 12 months, 7.78% - not bad for a loss - better than MMFunds
or CDs.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In conclusion, what I really like about the LEAP Strangle is
the high reward with a hedged risk, and very little monitoring until the Leap
expires. If the stock then settles lower (or higher) another "Collar"
of Leaps can be put on for another two years. </div>
<br />
<div class="MsoNormal">
<br /></div>
DITMcallshttp://www.blogger.com/profile/03827245710732948197noreply@blogger.com0tag:blogger.com,1999:blog-3611080988641143523.post-82569744862818703752014-05-15T09:08:00.001-07:002014-05-15T09:08:16.185-07:00Leap Update<div class="MsoNormal">
Back from vacation - time to update the DITM and LEAP
trades.</div>
<div class="MsoNormal">
On May 15 I closed out the Trina Solar, as it looks weak,
chartwise, plus I'm not big on <st1:country-region w:st="on">China</st1:country-region>
accounting or green/eco stocks with a pending major downturn on the way.</div>
<div class="MsoNormal">
Metrics on TSL (Trina) were as follows:</div>
<div class="MsoNormal">
DEBIT CREDIT</div>
<div class="MsoNormal">
Bought 500 at $8.97 4494</div>
<div class="MsoNormal">
Sold calls -2015 10-strike 1211</div>
<div class="MsoNormal">
Sold puts- 2015 7-strike 937</div>
<div class="MsoNormal">
Rolled Up puts to 10 493</div>
<div class="MsoNormal">
Rolled up Calls-2016 -15 597 </div>
<div class="MsoNormal">
Rolled up Puts-2016 -13 1333</div>
<div class="MsoNormal">
Bot Calls to close 1199</div>
<div class="MsoNormal">
Bot Puts to close <u>2638<o:p></o:p></u></div>
<div class="MsoNormal">
Sold stock <u>5216<o:p></o:p></u></div>
<div class="MsoNormal">
TOTAL: 8928 9190</div>
<br />
<div class="MsoNormal">
Profit: 262 5.83%
for 9 months, or 7.78% annualized. Not bad for a "loser".</div>
DITMcallshttp://www.blogger.com/profile/03827245710732948197noreply@blogger.com0tag:blogger.com,1999:blog-3611080988641143523.post-59585306738148934742014-05-02T08:43:00.002-07:002014-05-02T08:43:14.517-07:00INTO EVERY LIFE...a little rain must fall! <br />
After 4 good years of DITM earning 11% in my small IRA ( a DITM microcosm), 2013 actually lost a small amount, due to 5 losses on Energy and gold stocks (my bad, not the DITM strategy). With selling covered calls BELOW the buy price (5 to 10%) such losses should be rare in a 5-6 month timeframe, but better Sector Selection would solve that.<br />
So far in 2014, several trades are still ongoing, but the completed trades (4 wins with one $57 loss!) averaged 4.7% YTD, or 14.1% annualized. Tighter stops are required, and the LEAP strategy is doing much better. Although final results won't be in until the Leaps expire in 2015 and 2016, one family account I do them in is up 29% over 5 months average holding period. DITMcallshttp://www.blogger.com/profile/03827245710732948197noreply@blogger.com0tag:blogger.com,1999:blog-3611080988641143523.post-40645324171893017652014-02-26T11:39:00.000-08:002014-02-26T11:39:26.509-08:00LEAP RESULTSAs I mentioned in my talk before the San Francisco Bay Area Options Group last weekend, my Leap Strangle (see Older Posts) has taken precedence over DITM for the time being, at least until Volatility (i.e., IV) widens. In my talk I showed a table of my family portfolio of Leaps that had a paper (marked to market) return of about 7% for basically four months.<br />
<br />
As this Bull market marches onward into its sixth year, I've become more concerned with safety, although, as the results of my personal Leap portfolio show, not only is the safety cushion much wider, but so is the Reward! As explained earlier, the "Cushion" is the money brought in by selling both Leap calls (covered) and puts for a goodly portion of the purchase price of the stock.<br />
<br />
Not only do I want to ladder the expiry date of these Strangles (2015, 2106, 2017), but my entry has been almost monthly from just over a year ago; of the 20 different positions I hold, 10 were entered in the last quarter of 2013, four this year.<br />
<br />
Adding up the current (paper) profit, of the $81,449 invested in stock, the walkaway profit (if positions were closed out), including dividends, is $19,173 - dividends are $2868 of this total. Despite the sliding scale of entry time, the profit is 23.54%!<br />
<br />
Full disclosure - if the trades are done in an IRA, or non-margin account, the result will be less, as one has to include in the cost basis the sequester of funds to buy (if necessary) the stock "put" to one if the stock drops and REMAINS below the put strike price at expiry. 12 of the stocks have an 2015 expiry; a few were rolled up (down) and out to 2016 - 2017 won't be available until October of this year.DITMcallshttp://www.blogger.com/profile/03827245710732948197noreply@blogger.com0tag:blogger.com,1999:blog-3611080988641143523.post-68754739718718256502014-02-08T15:37:00.001-08:002014-02-08T15:37:09.921-08:00What Now?<div class="MsoNormal">
After a 32% gain in the <st1:country-region w:st="on">U.S.</st1:country-region> stock market in 2013 only a
Pollyanna would expect more of the same, without profit-taking, rebalancing,
and sector rotation. I recently wrote of a defensive investment strategy that,
in my opinion based on thirty years of option experience, has both a high
degree of safety and a lofty double-digit return - selling LEAP Strangles ( put
& call straddles with different strike prices).</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Having tested this strategy so far with 20 positions, I'd
like to present three of the latest positions with projected yields. (These trains have probably left the
station, so are not to be considered recommendations, as exceptional as they
may be) :</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
On August 16 of last year I purchased 500 shares of Trina
Solar (TSL) at $8.97 a share, ($4494 incl. commission) while simultaneously selling
a covered call (Leap) of 2015 - the $10 strike price-, for $1211, and selling
the same Leap expiry put - the $8 strike- for a credit of $937. The intent was
if the stock remained, or at least returned to, the same $9 price on Jan. 2015'
third Friday, both options would expire worthless and I would keep the combined
$2148 for a 47.8% profit, only to repeat the process with another two year Leap
Strangle. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
However, as it turned out, the stock went on a tear,
doubling in the next few months, so I decided to raise both the put and call
strikes to match and bring in more "security" money. In a trade off,
this does increase the risk a bit, especially when you upgrade the call for a
debit, to release more of the take-away price from the call- from $10 to 15,
released $2500 and cost me a debit of $597. Raising the put was for a net
credit : $1353. </div>
<div class="MsoNormal">
If the options expire worthless and I sell the stock at its
current price - $14.40, my return would be 135%, or $6083, thanks to the fine-tuning for the
stock appreciation.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The next two examples are a bit simpler, sans rollouts -
making the monitoring almost nonexistent:</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
YRC Worldwide trucking, at $18.90 a share on January 7 of
this year, fell within my boundaries; the Implied Volatility (IV) on the
options, which normally falls within the 20 to 30 range, was 100 and 120,
meaning the prices were huge! By buying 300 shares ($5679) and selling the 2016
expiry 20 call and 17 put ($2599 and 2839, or $5438) I got almost all my
investment back immediately! Since Volatility usually indicates a fragile
situation, the stock dropped to almost twelve within a few short days, but
rebounded back to its current $21 level. Should the stock remain here or above, returns
would be $11,438 less the $5679 ( $5759) or over 100% (doubling my investment
over two years.</div>
<div class="MsoNormal">
Of course, there is the possibility of the stock dropping
below the $17 put strike and more stock would be put to me, unless I closed it
out beforehand. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The final example is on an ETF - the triple strength Gold
NUGT which has Leaps. On February 6 I bought 100 shares for $35.95 - well out
of the $5-20 LEAP Strangle range- but again I could not resist the IV of 93/98.
NUGT shares cost $3604 (with commission); options brought in $1544 and $1380 -
$2924. The put strike price for 2016 (at which time I assume gold will be
higher) was $30, and the call at $40- room to run, both ways.</div>
<div class="MsoNormal">
Finally, doing the math on this trade: If NUGT stays or
settles at the initial price of $36, two year return will be 83%; if it rises
to $40 or above (called away) - 94%. </div>
<div class="MsoNormal">
If it falls and stays below 30, both the put and stock will
lose money as the call gains by decay - occasional monitoring of gold will be
prudent. If slightly below 35, one might consider another two-year collar
(strangle) since they own the ETF already. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<br />
<div class="MsoNormal">
Full disclosure: Low-priced stocks can be an indication of
weakness - they can go bankrupt, Pink Sheets (OTCBB), or candidates for mergers
or takeovers, in which case option treatment will vary. Stocks mentioned above,
as well as the LEAP strategy, are only for informational use, not
recommendations. Common sense and brokers' requirements dictate a fairly
extensive knowledge of options and their dangers. None of the above pay dividends
- this may also be a positive factor. Cost basis will differ if done in a
tax-deferred (IRA) account where loss sequester is required, not margin equity
from stocks. </div>
DITMcallshttp://www.blogger.com/profile/03827245710732948197noreply@blogger.com0tag:blogger.com,1999:blog-3611080988641143523.post-87439425385513618722014-02-07T12:56:00.001-08:002014-02-07T12:56:46.901-08:00Leaping Ahead<div class="MsoNormal" style="margin-left: .75in;">
Recently Stephen Todd pointed out
that since 1900 there have only been three times that the stock market has
risen five consecutive years up until now: the '20s, '40s, and '80s, which did
not end well! A fourth time it rose 9 years - 1990s (say no more). For this
reason it seems logical to assume a sideways to down market-strategy would be
prudent. I also thought this in May 2009, when I started testing my DITM
(deep-in-the-money covered call) hedging strategy, which happened to coincide
with the recent 4th five-year up market, although my test account actually rose
11% per year for 4 years, then flatlined due to poor/early sector selection and
low option Volatility caused by the Up market. It also increased the cushion
from being 5 to 10% in the money protection, to much higher, for which I am now
thankful.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.0in; margin-right: 63.0pt; margin-top: 0in;">
With a higher likelihood of stocks
now moving sideways to down for the near
future, an even more prudent strategy is being tested - one that a client
successfully employed several years ago when I was a senior option trader (ROP)
with Charles Schwab. This client would turn the tables, so to speak, from being
the "patsy" in the game to being the House, or casino - by selling
options rather than speculating on potential direction. The concept is to buy a
quality stock in the $5 to 20 range that has LEAP options and sell a covered
call (never a "naked" one), and simultaneously selling the same year
Leap put- both slightly out of the money. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="margin-left: .75in;">
Normally one can immediately bring
between 1/3 and 1/2 of the funds spent on buying the stock, providing a better
cushion than the above DITM plan; although being similar to it, the Safety and
Reward are both considerably higher, and the monitoring is almost negligible
for about two years- at which time the options expire. Although potential
annual double-digit profits are likely, direction is not important, but being
called away at expiry does increase the return.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="margin-left: .75in;">
Since one year ago I have amassed
a Leap portfolio of 20 positions, mostly done recently. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="margin-left: 45.0pt;">
As with any investing strategy
there are Risks attached: </div>
<div class="MsoNormal" style="margin-left: 45.0pt; text-indent: 45.0pt;">
Below is the
logic of the strategy with a theoretical example, and the "Visible
Hand" of five fingers ( A through E) of what can happen over time.</div>
<div class="MsoNormal" style="margin-left: 45.0pt;">
As with "E", more stock
can be put to the investor - so they must want to own the stock. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<table align="left" border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse: collapse; margin-left: .1in; margin-right: .1in; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-table-anchor-horizontal: page; mso-table-anchor-vertical: paragraph; mso-table-left: .8in; mso-table-lspace: 9.0pt; mso-table-rspace: 9.0pt; mso-table-top: 27.2pt; width: 909px;">
<tbody>
<tr style="height: 13.2pt; mso-yfti-firstrow: yes; mso-yfti-irow: 0;">
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 57.5pt;" valign="bottom" width="96">
<div class="MsoNormal">
<br /></div>
</td>
<td colspan="2" nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 97.3pt;" valign="bottom" width="162">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">**Worst case:<o:p></o:p></span></b></div>
</td>
<td colspan="3" nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 342.35pt;" valign="bottom" width="571">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">Stock gets taken over or involved
in merger - adjusted options<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 1;">
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 57.5pt;" valign="bottom" width="96">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 49.15pt;" valign="bottom" width="82">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.15pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td colspan="3" nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 342.35pt;" valign="bottom" width="571">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">gets complicated, but no loss
involved; XYZ goes bankrupt: 1 in 1,000<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 2;">
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 57.5pt;" valign="bottom" width="96">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 49.15pt;" valign="bottom" width="82">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.15pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 246.3pt;" valign="bottom" width="411">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">Profits on other 15-20 stocks make
up for loss.<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 3;">
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 57.5pt;" valign="bottom" width="96">
<div class="MsoNormal">
<br /></div>
</td>
<td colspan="6" nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 487.65pt;" valign="bottom" width="813">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">***commissions not included;
stocks bought in IRAs, etc. must sequester Max Loss(e.g.$700)<o:p></o:p></span></b></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 4;">
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 57.5pt;" valign="bottom" width="96">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 49.15pt;" valign="bottom" width="82">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.15pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td colspan="3" nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 342.35pt;" valign="bottom" width="571">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">In IRAs, profits become 8%: and
11% annualized (if called away)<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 5;">
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 57.5pt;" valign="bottom" width="96">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 49.15pt;" valign="bottom" width="82">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.15pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td colspan="3" nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 342.35pt;" valign="bottom" width="571">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">If repeated every two years, no
stock cost - profits much higher.<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 6; mso-yfti-lastrow: yes;">
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 57.5pt;" valign="bottom" width="96">
<div class="MsoNormal">
<br /></div>
</td>
<td colspan="3" nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 343.6pt;" valign="bottom" width="573">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">A Strangle is just a Straddle with
different prices for calls and puts<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<br />
<table align="left" border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse: collapse; margin-left: .1in; margin-right: .1in; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-table-anchor-horizontal: page; mso-table-anchor-vertical: paragraph; mso-table-left: .8in; mso-table-lspace: 9.0pt; mso-table-rspace: 9.0pt; mso-table-top: 27.2pt; width: 965px;">
<tbody>
<tr style="height: 13.8pt; mso-yfti-firstrow: yes; mso-yfti-irow: 0;">
<td nowrap="" style="height: 13.8pt; padding: 0in 5.4pt 0in 5.4pt; width: 57.5pt;" valign="bottom" width="96">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.8pt; padding: 0in 5.4pt 0in 5.4pt; width: 49.15pt;" valign="bottom" width="82">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.8pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.15pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.8pt; padding: 0in 5.4pt 0in 5.4pt; width: 81.95pt;" valign="bottom" width="137">
<div class="MsoNormal">
<b><u><span style="font-family: Arial; font-size: 10.0pt;">THEORETICAL<o:p></o:p></span></u></b></div>
</td>
<td nowrap="" style="height: 13.8pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<b><u><span style="font-family: Arial; font-size: 11.0pt;">LEAP<o:p></o:p></span></u></b></div>
</td>
<td colspan="2" nowrap="" style="height: 13.8pt; padding: 0in 5.4pt 0in 5.4pt; width: 96.0pt;" valign="bottom" width="160">
<div class="MsoNormal">
<b><u><span style="font-family: Arial; font-size: 11.0pt;">STRANGLE<o:p></o:p></span></u></b></div>
</td>
<td nowrap="" style="height: 13.8pt; padding: 0in 5.4pt 0in 5.4pt; width: 54.15pt;" valign="bottom" width="90">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.8pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.8pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.8pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 1;">
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 57.5pt;" valign="bottom" width="96">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 49.15pt;" valign="bottom" width="82">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.15pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 81.95pt;" valign="bottom" width="137">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 54.15pt;" valign="bottom" width="90">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 2;">
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 57.5pt;" valign="bottom" width="96">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 49.15pt;" valign="bottom" width="82">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">STOCK:<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.15pt;" valign="bottom" width="80">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">XYZ<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 81.95pt;" valign="bottom" width="137">
<div align="right" class="MsoNormal" style="mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: 57.65pt; mso-element-top: 27.2pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<b><span style="font-family: Arial; font-size: 10.0pt;">$9 <o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 54.15pt;" valign="bottom" width="90">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<b><u><span style="font-family: Arial; font-size: 10.0pt;">DEBIT<o:p></o:p></span></u></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="80">
<div class="MsoNormal">
<b><u><span style="font-family: Arial; font-size: 10.0pt;">CREDIT<o:p></o:p></span></u></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 3;">
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 57.5pt;" valign="bottom" width="96">
<div class="MsoNormal">
<br /></div>
</td>
<td colspan="4" nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 227.25pt;" valign="bottom" width="379">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">Buy 100 shares of XYZ at $9.00<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 54.15pt;" valign="bottom" width="90">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div align="right" class="MsoNormal" style="mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: 57.65pt; mso-element-top: 27.2pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<b><span style="font-family: Arial; font-size: 10.0pt;">$900 <o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 4;">
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 57.5pt;" valign="bottom" width="96">
<div class="MsoNormal">
<br /></div>
</td>
<td colspan="3" nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 179.25pt;" valign="bottom" width="299">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">Sell 1 LEAP covered call -<o:p></o:p></span></b></div>
</td>
<td colspan="4" nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 198.15pt;" valign="bottom" width="330">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">Jan.2016 10-strike price @ $1.20<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="80">
<div align="right" class="MsoNormal" style="mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: 57.65pt; mso-element-top: 27.2pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<b><span style="color: red; font-family: Arial; font-size: 10.0pt;">120<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 5;">
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 57.5pt;" valign="bottom" width="96">
<div class="MsoNormal">
<br /></div>
</td>
<td colspan="5" nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 275.25pt;" valign="bottom" width="459">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">Sell 1 LEAP put-Jan. 2016 7-strike
price @ $.80<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 54.15pt;" valign="bottom" width="90">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="80">
<div align="right" class="MsoNormal" style="mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: 57.65pt; mso-element-top: 27.2pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<b><span style="color: red; font-family: Arial; font-size: 10.0pt;">80<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 6;">
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 57.5pt;" valign="bottom" width="96">
<div class="MsoNormal">
<br /></div>
</td>
<td colspan="4" nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 227.25pt;" valign="bottom" width="379">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">4% Dividend; 9 quarters @ $9/Q=<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 54.15pt;" valign="bottom" width="90">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="80">
<div align="right" class="MsoNormal" style="mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: 57.65pt; mso-element-top: 27.2pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<b><u><span style="color: red; font-family: Arial; font-size: 10.0pt;">81<o:p></o:p></span></u></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 7;">
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 57.5pt;" valign="bottom" width="96">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 49.15pt;" valign="bottom" width="82">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.15pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 81.95pt;" valign="bottom" width="137">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 54.15pt;" valign="bottom" width="90">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">TOTALS:<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div align="right" class="MsoNormal" style="mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: 57.65pt; mso-element-top: 27.2pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<b><span style="font-family: Arial; font-size: 10.0pt;">900<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="80">
<div align="right" class="MsoNormal" style="mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: 57.65pt; mso-element-top: 27.2pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<b><span style="color: red; font-family: Arial; font-size: 10.0pt;">281<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 8;">
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 57.5pt;" valign="bottom" width="96">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 49.15pt;" valign="bottom" width="82">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">% Profit:<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.15pt;" valign="bottom" width="80">
<div align="right" class="MsoNormal" style="mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: 57.65pt; mso-element-top: 27.2pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<b><span style="font-family: Arial; font-size: 10.0pt;">31.22%<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 81.95pt;" valign="bottom" width="137">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 54.15pt;" valign="bottom" width="90">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 9;">
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 57.5pt;" valign="bottom" width="96">
<div class="MsoNormal">
<b><u><span style="font-family: Arial; font-size: 10.0pt;">RESULTS<o:p></o:p></span></u></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 49.15pt;" valign="bottom" width="82">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">Ann.%:<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.15pt;" valign="bottom" width="80">
<div align="right" class="MsoNormal" style="mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: 57.65pt; mso-element-top: 27.2pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<b><span style="font-family: Arial; font-size: 10.0pt;">14.40%<o:p></o:p></span></b></div>
</td>
<td colspan="2" nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 129.95pt;" valign="bottom" width="217">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">(over 12 months, not 26)<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 54.15pt;" valign="bottom" width="90">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 10;">
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 57.5pt;" valign="bottom" width="96">
<div class="MsoNormal">
<b><u><span style="font-family: Arial; font-size: 10.0pt;">A<o:p></o:p></span></u></b></div>
</td>
<td colspan="2" nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 97.3pt;" valign="bottom" width="162">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">HomeRun:<o:p></o:p></span></b></div>
</td>
<td colspan="4" nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 225.95pt;" valign="bottom" width="377">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">If stock called away at $10 in
Jan.2016<o:p></o:p></span></b></div>
</td>
<td colspan="2" nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 102.15pt;" valign="bottom" width="170">
<div class="MsoNormal">
<b><span style="color: red; font-family: Arial; font-size: 10.0pt;">$281+100=381<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 11;">
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 57.5pt;" valign="bottom" width="96">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 49.15pt;" valign="bottom" width="82">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">% Profit:<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.15pt;" valign="bottom" width="80">
<div align="right" class="MsoNormal" style="mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: 57.65pt; mso-element-top: 27.2pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<b><span style="font-family: Arial; font-size: 10.0pt;">42.33%<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 81.95pt;" valign="bottom" width="137">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 54.15pt;" valign="bottom" width="90">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 12;">
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 57.5pt;" valign="bottom" width="96">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 49.15pt;" valign="bottom" width="82">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">Ann.%:<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.15pt;" valign="bottom" width="80">
<div align="right" class="MsoNormal" style="mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: 57.65pt; mso-element-top: 27.2pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<b><span style="font-family: Arial; font-size: 10.0pt;">19.54%<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 81.95pt;" valign="bottom" width="137">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 54.15pt;" valign="bottom" width="90">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 13;">
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 57.5pt;" valign="bottom" width="96">
<div class="MsoNormal">
<b><u><span style="font-family: Arial; font-size: 10.0pt;">B<o:p></o:p></span></u></b></div>
</td>
<td colspan="3" nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 179.25pt;" valign="bottom" width="299">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">Stock settles at $10 on expiry-<o:p></o:p></span></b></div>
</td>
<td colspan="4" nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 198.15pt;" valign="bottom" width="330">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">Maximum profit, repeat NEXT two
years<o:p></o:p></span></b></div>
</td>
<td colspan="3" nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 144.05pt;" valign="bottom" width="240">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">raise option strike prices.<o:p></o:p></span></b></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 14;">
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 57.5pt;" valign="bottom" width="96">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 49.15pt;" valign="bottom" width="82">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.15pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 81.95pt;" valign="bottom" width="137">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 54.15pt;" valign="bottom" width="90">
<div class="MsoNormal">
<br /></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">call:11<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="80">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">put-:9<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="80">
<div class="MsoNormal">
<br /></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 15;">
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 57.5pt;" valign="bottom" width="96">
<div class="MsoNormal">
<b><u><span style="font-family: Arial; font-size: 10.0pt;">C<o:p></o:p></span></u></b></div>
</td>
<td colspan="3" nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 179.25pt;" valign="bottom" width="299">
<div class="MsoNormal">
<b><span style="font-family: Arial; font-size: 10.0pt;">Stock stays the same: $9<o:p></o:p></span></b></div>
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<b><span style="font-family: Arial; font-size: 10.0pt;">Maximum profit, repeat for two
years<o:p></o:p></span></b></div>
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<b><span style="font-family: Arial; font-size: 10.0pt;">* If stock falls to $7 ON Jan.21,
2016 - Keep $281, resell 2 more years out (loss of $200 on XYZ).<o:p></o:p></span></b></div>
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<tr style="height: 13.2pt; mso-yfti-irow: 17;">
<td nowrap="" style="height: 13.2pt; padding: 0in 5.4pt 0in 5.4pt; width: 57.5pt;" valign="bottom" width="96">
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<b><u><span style="font-family: Arial; font-size: 10.0pt;">D<o:p></o:p></span></u></b></div>
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<b><span style="font-family: Arial; font-size: 10.0pt;">BUT-<o:p></o:p></span></b></div>
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<b><span style="font-family: Arial; font-size: 10.0pt;">Sell $6 put; sell $8 call (2018)<o:p></o:p></span></b></div>
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<b><span style="font-family: Arial; font-size: 10.0pt;">No cost for stock this time!!<o:p></o:p></span></b></div>
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<tr style="height: 3.4pt; mso-yfti-irow: 19;">
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<b><u><span style="font-family: Arial; font-size: 10.0pt;">E<o:p></o:p></span></u></b></div>
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<b><span style="font-family: Arial; font-size: 10.0pt;">*Worse Case: Stock falls BELOW $7
put strike price ON Jan.21 2016: <o:p></o:p></span></b></div>
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<b><span style="font-family: Arial; font-size: 10.0pt;">100 shares of XYZ are
"put" to you; repeat D<o:p></o:p></span></b></div>
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DITMcallshttp://www.blogger.com/profile/03827245710732948197noreply@blogger.com0tag:blogger.com,1999:blog-3611080988641143523.post-2893545036778071272014-01-23T10:17:00.001-08:002014-01-23T10:17:52.824-08:00DEFINITIVE DITM HEDGE<!--[if gte mso 9]><xml>
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<br />
<div class="MsoNormal">
As I have written copiously about DITM (Deep-In-The-Money)
covered calls as being a safe haven for investors/traders seeking an
alternative to less risky strategies, with my extensive testing of it for
nearly five years, solid proof came today in my most recent trade. Although
DITM missed out on much of the unexpected 30-someting point 2013 rally, the
upsurge did provide a wider cushion with further ITM security. It also hedged
this losing trade, which I finally gave up on - one of the very few, and first
of 2014: Ensco (ESV).</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Looking back, just about all of the DITM losses were a
result of being in the wrong Sector(s) - Energy, Precious Metals, Natural
Resources: CLF, VALE, QRE, PGH, etc.</div>
<div class="MsoNormal">
ESV also belongs there.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
I bought only 100 shares of ESV in May of 2013 for just over
$62 - $6214; selling the Sept. $57.5 ITM call and again the Jan.2014 call, as
well as<span style="mso-spacerun: yes;"> </span>nice 5.1/2% dividends, I finally
sold the shares today at $52 5/8, or$5253. Instead of suffering a $1000 loss on
the 100 shares, my net loss was $57 - if I would have waited for an uptick I
could have broken even!<span style="mso-spacerun: yes;"> </span>So basically
what I lost was Time - much like leaving $$ in a MMF at zero percent. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
After four years of testing in my small IRA, which gained @
11% per year average, 2013 was a flat year, partially due to my Sector
selection (see above) expecting a reversal, and also the steadily rising
markets produced a mild Volatility, which impacted the option prices
negatively. That is why I moved much of my assets into another defensive
strategy - more Reward and even less Risk, but a little more complicated for
option tyros: LEAP Strangles ( buying $5 to 15 stocks and selling Leap
Out-Of-The -Money Covered Calls </div>
<div class="MsoNormal">
<span style="mso-spacerun: yes;"> </span>and Puts against
them. This is outlined in recent posts of my DITM blog: http://ditmcalls.blogspot.com/
<span style="mso-spacerun: yes;"> </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
A few of my Leap holdings (not recommendations!) include F,
BAC, FTR, NOK, et.al.</div>
DITMcallshttp://www.blogger.com/profile/03827245710732948197noreply@blogger.com0tag:blogger.com,1999:blog-3611080988641143523.post-66831990902031784062014-01-16T14:02:00.001-08:002014-01-16T14:02:24.623-08:00DITM Recap 2013<!--[if gte mso 9]><xml>
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<br />
<div class="MsoNormal">
As mentioned before in this blog, after 4 years of<span style="mso-spacerun: yes;"> </span>11% average returns in my small IRA - the
microcosm of the DITM strategy, 2013 finally hit stall speed; partly because
the steady rise of the market killed Implied Volatility (IV), rendering the VIX
@ 13-14, and partly because my stock selection happened to be premature - going
into Energy, Chemicals, and gold.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Here is the non-GAAP best-efforts analysis of the round trip
trades closed out in 2013:</div>
<div class="MsoNormal">
First the winners - 20 total, averaging 12.70% with an
average 5.1 month duration. </div>
<div class="MsoNormal">
Losing trades were only 3, but which amounted to over 40% of
the winners, since losses are usually quite a bit larger by the time they are
under water and decided upon. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Since it is difficult to arrive at a profit/loss since the
same money is used for more than 1 position during the year, the annualized
percent of 7.16% is based on the net profit. Hopefully 2014 will be an
improvement, especially of there is a substantial correction, which is hedged
against, raising the Volatility and premium of the sold Call options, as well
as the 3%+ dividends from the underlying. Hopefully the commodity sector will
rebound this year as well.</div>
DITMcallshttp://www.blogger.com/profile/03827245710732948197noreply@blogger.com0tag:blogger.com,1999:blog-3611080988641143523.post-11583044739915460522014-01-13T10:05:00.002-08:002014-01-13T10:05:22.692-08:00Happy New YearAs readers have noticed there has not been much activity in DITM recently. After 4 years of successful 11% returns per year in my small IRA ( a surrogate for DITM) the Groundhog Day steady rise in the markets have crushed Volatility, and new positions and rollouts have been infrequent.<br />
<br />
More concentration has been on the Leap Strangle strategy which I embarked on just over a year ago. This has done better, despite a errant reliance on gold and precious metals' stocks, which should recover in time. Those that do not will result in rolling down of the calls and taking on more stock via the sold OTM puts (in a sense, doubling down).<br />
<br />
As of today, with the first position - BAC- taken in Dec.'12, and adding 1 or 2 laddered monthly through last week, where I leapt into YRCW! Quite a risky trade, but the IV was over 100 on both puts and calls, to where I brought in with option premium almost as much as I spent on the stock! There is a reason for high IV - RISK- which I saw the next few days, when the stock dropped to below my sold put, at least temporarily.<br />
<br />
Even with a very recent paper loss in YRCW and four other gold, silver and coal stocks ( of the 17 now in the strategy) going negative so far, the winners have propelled the 13 month return to a cumulative 13.67%. This does not include any max loss requirement for the puts if done in an IRA. DITMcallshttp://www.blogger.com/profile/03827245710732948197noreply@blogger.com0