Systematic Covered Writing

    More than just covered calls . . .

Initial Position - The Math Exercise

This SysCW Initial Position was emailed to subscribers on the day the transactions were executed.  In order to know what to do in the future, it is important to understand what we did in the past.

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The Email Comments:

A suggestion for diversification received from a subscriber.  Thanks!  We’ll see how it ‘pans’ out.

The Covered Writer

Additional Comments:  The more conservative approach is to have the downside percentage meet the guidelines.  Look at this as cash in the hand as opposed to possible cash in the hand if the strike price is above the purchase price. After a nice run up in 2005, the stock basically traded sideways during 2006. The writer is hedging towards the downside and yet the return is 'not bad' of the option is assigned. Accepting the fact that nothing is perfect, this seemed to be a reasonable new Initial Position.

 

	Systematic Covered Writing
	… more than just covered calls!
	Initial Position:    The Math Exercise
	Position:	100   CCJ   With   Sep 2007   $35.00   LEAP
	CAMECO CORPORATION				CCJ Sep 2007 35.0000 call
	Stock Symbol			CCJ		Call Symbol			.CCJIG
	Stock Purchase Price			$37.880		Call Sold Price			$6.50
	Number of Shares			100		Call Strike Price			35.000
	Trade Entry Date			22-Jan-07		Expiration M & Y			9	2007
	Net Cash Generated			$641.75		Net Stock Investment			$3,795.00
	Net Return if Called			$329.75		Annualized  if Called (1)			13.11%		(A)
	Cash Required for Trade					$3,153.25
	Percentage Recovered w/Option *					16.91%	(B)
Days Until Expiration & Expire Date						242		21-Sep-07

PLEASE NOTE THAT THIS EXAMPLE IS NOT TO BE CONSIDERED AS A RECOMMENDATION TO INVEST IN CCJ 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 suggested 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 provided for 'educational purposes' for the sole purpose of illustrating the Systematic Covered Writing strategies.

Thank you!

SYSTEMATIC COVERED WRITING
Copyright © 2006. All rights reserved.
Revised: 02/05/07