Systematic Covered Writing

... more than just covered calls!

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Option Assigned Examples

THE STOCK: JADE - LJ International, Inc.

POSITION ESTABLISHED DATE: April 27, 2007

ASSIGNMENT DATE: July 20, 2007

COMMENTS: See! It's not like the writer won't establish a short-term position . . . it's just unusual to obtain 15.3% downside protection with an 84 day covered position. Any bullish strategy should be generating a reasonable return so far this year, including Systematic Covered Writing.

      Systematic Covered Writing      
              . . . More than just covered calls . . .      
      SysCW   Position Tracker        
               
Historical Data Closed Position  
        Stock Cash Total Cash  Annualized 
Date Strategy Status Position Investment Generated Generated Gain
27-Apr-07 Initial Stock Purchase Buy 200 JADE @ 10.4275 ($2,092.50)      
      LJ International, Inc.        
27-Apr-07 Initial LEAP Option  Sell two Jul $10 calls @ 1.65   $320.49    
20-Jul-07 Assigned Stock Sell 200 JADE @ 10 $1,982.94 ($109.56)    
20-Jul-07     Net Cash Gain     $210.93  Annualized 
84 Days   Net Percentage Gained     10% 43.80%

I don't mean to stay on the soapbox, but while the results are quite real, the question of their repeatability should be taken into account!  I think this is a good example of the tree verses the forest.  It's nice to see positions like this as they help make up for ones that are not exactly something to write home about.  The key . . . the bottom line . . . not any given data point.

The return when annualized is significantly above the 15% target. In a case where the Initial Call Option is assigned, the back-to-cash profit is not a surprise, but rather a known amount since the position was established. Once again, the writer is not factoring in that the initial premium of $171.74 has been 'in the bank' since day one.

PLEASE NOTE THAT THIS EXAMPLE IS NOT TO BE CONSIDERED AS A RECOMMENDATION TO INVEST IN JADE STOCK OR ANY OTHER EQUITY.  THE INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY.  THERE IS NO GUARANTEE THAT SIMILAR TRANSACTIONS CAN BE EXECUTED IN THE FUTURE. INVESTING IN THE STOCK MARKET INVOLVES RISKS, DO SO ONLY WITH A KNOWLEDGE AND UNDERSTANDING OF THE RISKS INVOLVED!

The information provided above is for informational purposes only, and no mention of a particular security constitutes a recommendation to buy, sell, or hold that or any other security, or that any particular security, portfolio of securities, transaction, investment strategy is suitable for any specific person. You further understand that the Covered Writer will not advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the information available on this website may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Always remember that past results are not necessarily indicative of future performance.

These are the terms of use.  Why are they here?  Because the examples provided are real.  The transactions actually took place.  The dates are real, the positions are real.  Some transactions will have been executed on the day you receive the email.  What you are agreeing to, is the fact that in no way is it being suggesting that you can, or should, enter a similar position.  Why?  Because that would be providing investment advice and the Covered Writer is not authorized to do that.  There is also no guarantee that similar transactions could be executed at any time in the future. Only licensed brokers are allowed to provide investment advice.  Therefore, you are agreeing that the preceding example was provide for 'educational purposes' for the sole purpose of illustrating the Systematic Covered Writing strategies.

Thank you! Bq

SYSTEMATIC COVERED WRITING
Copyright © 2007. All rights reserved.
Revised: 07/17/07