Returns as of Sep 2009

The format of this report has been simplified and includes the Expiration Results, Total Return Since Inception, Year-to-Date Return, and Yearly Returns. Performance is based on a Working Capital Model (see Definition of Terms at the bottom of this report). Market value, while reported, is less important than the income generated by the assets in the portfolio.

<u>Options Expiration Report for Sep 2009</u>

After returning from a two week vacation at the end of August, I had a lot of catching up to do at work, so I didn't have much time to tend to my covered call (CC) portfolio. I had a 3 CC positions called away early to capture the dividends (ADP, DOV, & UTX) before I had a chance to roll them, so I just re-entered those positions as cash secured puts (CSP).

Since the market has continued to rally, many of the CC positions I've been rolling out at the same strike were getting deeper ITM. Since my strategy of letting positions get called away and then re-entering them as CSP's has been working so far, I decided to allow several positions to get called away at expiration. I'll sell CSP's next week to re-enter these, except for the second positions in BAC & LM, which I decided to close at a small profit to free up the capital.

I decided to simplify this report for a couple of reasons. 1) It was very time consuming entering all the various stats, and 2) it was getting too complicated. So, starting this month, I'll report only two sets of figures, Working Capital Results (income generated on the original cost basis of the positions held) and Market Value Results (the change in market value of the account). This takes less time to input and hopefully it will be easier to understand.

That's all for this months report.

<u>Expiration Results</u>

Working Capital Results

Starting Working Capital: $312,412.43
Ending Working Capital: $313,348.75
Total Income: $936.32
Working Capital Return: 0.30%

Market Value Results

Starting Value: $208,179.51
Ending Value: $212,326.80
Total P/L: $4,147.29
Market Value Return: 1.99%

<u>Total Return Since Inception (May 2005-Present Month)</u>

Working Capital Results

Total Working Capital: $200,000.00
Ending Working Capital: $313,348.75
Total Income: $113,348.75
Working Capital Return: 56.67%
Annualized Working Capital Return: 15.70%

Market Value Results

Starting Value: $200,000.00
Ending Value: $212,326.80
Total P/L: $12,326.80
Market Value Return: 6.16%
Annualized Market Value Return: 1.71%

<u>2009 YTD Annual Return</u>

Working Capital Results

YTD Total Working Capital: $300,574.83
YTD Ending Working Capital: $313,348.75
YTD Total Income: $12,773.92
YTD Working Capital Return: 4.25%

Market Value Results

YTD Starting Value: $187,257.83
YTD Ending Value: $212,326.80
YTD Total P/L: $25,068.97
YTD Market Value Return: 13.39%

<u>2008 Annual Return</u>

Working Capital Results

Total Working Capital: $280,383.52
Ending Working Capital: $300,574.83
Total Income: $20,191.31
Working Capital Return: 7.20%

Market Value Results

Starting Value: $236,676.52
Ending Value: $187,257.83
Total P/L: -$49,418.69
Market Value Return: -20.88%

<u>2007 Annual Return</u>

Working Capital Results

Total Working Capital: $210,627.78
Ending Working Capital: $230,383.52
Total Income: $19,755.74
Working Capital Return: 9.38%

Market Value Results

Starting Value: $181,185.77
Ending Value: $186,676.52
Total P/L: $5,490.75
Market Value Return: 3.03%

<u>2006 Annual Return</u>

Working Capital Results

Total Working Capital: $167,840.28
Ending Working Capital: $210,627.78
Total Income: $42,787.50
Working Capital Return: 25.49%

Market Value Results

Starting Value: $157,659.27
Ending Value: $181,185.77
Total P/L: $23,526.50
Market Value Return: 14.92%

<u>2005 Annual Return (May-Dec)</u>

Working Capital Results

Total Working Capital: $100,000.00
Ending Working Capital: $117,840.28
Total Income: $17,840.28
Working Capital Return: 17.84%

Market Value Results

Starting Value: $100,000.00
Ending Value: $107,659.27
Total P/L: $7,659.27
Market Value Return: 7.66%

<u>Definition of Terms</u>

Working Capital is the total cost basis of the stocks and cash in the account. Working capital is increased by dividends, interest, realized capital gains, and deposits. Working capital is decreased by realized capital losses and withdrawals.

Working Capital Return is the percent of income, from option premium, dividends and interest, and net capital gains/losses, on Working Capital since the beginning of the reporting period.

Market Value is the market value of the stocks, options, and cash in the account if all positions were liquidated (i.e. the mark-to-market value).

Market Value Return is the percent change in Market Value since the beginning of the reporting period.

NOTE: Returns are calculated on a fiscal basis, not on a calendar month/year basis. Monthly returns are from one options expiration to the next. Yearly returns are from Dec options expiration to Dec options expiration of the following year.