USO - New Position

A new CSP position was established today on United States Oil (USO). All prices include IB commissions.

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
12/11/2012	USO	CSP Margin Used	CSP 100 USO @ 30.00		($3,000.00)
12/11/2012	USO	Initial Put Option	STO 1 Dec12 30.00 Put @ 0.13			$13.24

Position Summary

Cost Basis	($3,000.00)
Income Generated	$13.24
Percent Income Generated	0.44%
Annualized Income Generated	16.11%
Net Profit If Closed	$13.24
Percent Return If Closed	0.44%
Annualized Return If Closed	16.11%
Days Held to Expiration	10 days

GDX - New Position

A new CSP position was established today on Market Vectors Gold Miners (GDX). All prices include IB commissions.

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
12/11/2012	GDX	CSP Margin Used	CSP 100 GDX @ 44.00		($4,400.00)
12/11/2012	GDX	Initial Put Option	STO 1 Dec12 44.00 Put @ 0.21			$20.94

Position Summary

Cost Basis	($4,400.00)
Income Generated	$20.94
Percent Income Generated	0.48%
Annualized Income Generated	17.37%
Net Profit If Closed	$20.94
Percent Return If Closed	0.48%
Annualized Return If Closed	17.37%
Days Held to Expiration	10 days

AVP - Adjustment

The following adjustment was made today on Avon Products Inc (AVP). All prices include IB commissions.

Criteria	Value
Dividend Champions Status	Deleted*
Years of Consecutive Dividend Increases	0
Fair Value Estimate	$15.00**
Target Buy Price	$7.50
Target Margin of Safety	50.00%
Actual Buy Price	$26.00
Actual Margin of Safety	-73.33%

*The dividend was lowered and AVP was deleted from the Dividend Contenders list.

**Fair Value was lowered from $36 to $15 since inception, which turned my 27.78% Margin of Safety into a 73.33% Premium.

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
12/5/2012	AVP	Continued Trade	STO 2 Jan13 15.00 Call @ 0.39			$78.68

Current Position Summary

Cost Basis	($5,200.00)
Income Generated	$554.76
Percent Income Generated	10.67%
Annualized Income Generated	6.43%
Net Profit If Closed	($1,645.24)
Percent Return If Closed	-31.64%
Annualized Return If Closed	-19.06%
Days Held to Expiration	606 days

Trade History

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
5/23/2011	AVP	CSP Margin Used	CSP 200 AVP @ 26.00		($5,200.00)
5/23/2011	AVP	Initial Put Option	STO 2 Oct11 26.00 Put @ 0.82	Exercised		$164.56
10/21/2011	AVP	CSP Margin Returned	CSP 200 AVP @ -26.00		$5,200.00
10/21/2011	AVP	Stock Assigned	EX 2 Oct11 26.00 Put @ -26.00		($5,200.00)
12/1/2011	AVP	Dividend Received	DIV 200 Dividend @ 0.23			$46.00
3/1/2012	AVP	Dividend Received	DIV 200 Dividend @ 0.23			$46.00
4/4/2012	AVP	Continued Trade	STO 2 May12 25.00 Call @ 0.34	Expired		$68.55
6/1/2012	AVP	Dividend Received	DIV 200 Dividend @ 0.23			$46.00
7/27/2012	AVP	Continued Trade	STO 2 Aug12 19.00 Call @ 0.09	Expired		$18.49
9/4/2012	AVP	Dividend Received	DIV 200 Dividend @ 0.23			$46.00
9/14/2012	AVP	Continued Trade	STO 2 Oct12 19.00 Call @ 0.14			$28.48
12/3/2012	AVP	Dividend Received	DIV 200 Dividend @ 0.06			$12.00
12/5/2012	AVP	Continued Trade	STO 2 Jan13 15.00 Call @ 0.39			$78.68
1/18/2013	AVP		Totals		($5,200.00)	$554.76
DTE	606		Percent Income/Annualized		10.67%	6.43%

TEX - New Position

A new CSP position was established today on Terex (TEX). All prices include IB commissions.

This is a position which requires a minimum of 15% Downside Protection and 15% Annualized Return.

Criteria	Value
Downside Protection	15.27%
Annualized Return	18.13%
Fair Value Estimate	$33.00
Target Buy Price	$19.80
Target Margin of Safety	40.00%
Actual Buy Price	$21.00
Actual Margin of Safety	36.36%

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
12/4/2012	TEX	CSP Margin Used	CSP 100 TEX @ 21.00		($2,100.00)
12/4/2012	TEX	Initial Put Option	STO 1 Jan13 21.00 Put @ 0.47			$46.94

Position Summary

Cost Basis	($2,100.00)
Income Generated	$46.94
Percent Income Generated	2.24%
Annualized Income Generated	18.13%
Net Profit If Closed	$46.94
Percent Return If Closed	2.24%
Annualized Return If Closed	18.13%
Days Held to Expiration	45 days

SVXY - New Position

A new CSP position was established today on ProShares Short VIX Short-Term Futures (SVXY). All prices include IB commissions.

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
12/4/2012	SVXY	CSP Margin Used	CSP 100 SVXY @ 60.00		($6,000.00)
12/4/2012	SVXY	Initial Put Option	STO 1 Dec12 60.00 Put @ 0.59			$58.94

Position Summary

Cost Basis	($6,000.00)
Income Generated	$58.94
Percent Income Generated	0.98%
Annualized Income Generated	21.09%
Net Profit If Closed	$58.94
Percent Return If Closed	0.98%
Annualized Return If Closed	21.09%
Days Held to Expiration	17 days

IWM - New Position

A new CSP position was established today on iShares Russell 2000 Index (IWM). All prices include IB commissions.

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
12/4/2012	IWM	CSP Margin Used	CSP 100 IWM @ 78.00		($7,800.00)
12/4/2012	IWM	Initial Put Option	STO 1 Dec12 78.00 Put @ 0.37			$36.76

Position Summary

Cost Basis	($7,800.00)
Income Generated	$36.76
Percent Income Generated	0.47%
Annualized Income Generated	10.12%
Net Profit If Closed	$36.76
Percent Return If Closed	0.47%
Annualized Return If Closed	10.12%
Days Held to Expiration	17 days

EFA - New Position

A new CSP position was established today on iShares MSCI EAFE Index (EFA). All prices include IB commissions.

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
12/4/2012	EFA	CSP Margin Used	CSP 100 EFA @ 53.00		($5,300.00)
12/4/2012	EFA	Initial Put Option	STO 1 Dec12 53.00 Put @ 0.28			$27.69

Position Summary

Cost Basis	($5,300.00)
Income Generated	$27.69
Percent Income Generated	0.52%
Annualized Income Generated	11.22%
Net Profit If Closed	$27.69
Percent Return If Closed	0.52%
Annualized Return If Closed	11.22%
Days Held to Expiration	17 days

EEM - New Position

A new CSP position was established today on iShares MSCI Emerging Markets Index (EEM). All prices include IB commissions.

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
12/4/2012	EEM	CSP Margin Used	CSP 100 EEM @ 40.00		($4,000.00)
12/4/2012	EEM	Initial Put Option	STO 1 Dec12 40.00 Put @ 0.22			$22.24

Position Summary

Cost Basis	($4,000.00)
Income Generated	$22.24
Percent Income Generated	0.56%
Annualized Income Generated	11.94%
Net Profit If Closed	$22.24
Percent Return If Closed	0.56%
Annualized Return If Closed	11.94%
Days Held to Expiration	17 days

ARO CC vs CSP - New Positions

Once again there's been a lot of discussion on the JustCoveredCalls Yahoo group on the equivalence of ITM CC's vs OTM CSP's, so I decided to provide a "real life" example to show that these are truely equivalent positions. The stock, Aeropostale (ARO), was chosen at random and an ITM CC and OTM CSP was established today.

As you should be aware, option premium consists of intrinsic value (the difference between the stock price and the ITM strike price) and extrinsic value (sometimes referred to as time value). An OTM put has all extrinsic value, whereas an ITM call has both intrinsic and extrinsic value. Due to put/call parity, the extrinsic value of an ITM call and OTM put at the same strike/expiration should be equivalent. Extrinsic value is your income or profit, whereas intrinsic value is Return of Capital, or put another way, a refund or rebate on your investment. It's like going to the store with $20, buying a $20 product, and getting a $5 instant rebate. You actually paid $15 for the product and have $5 of your original $20 back in your hand. You didn't earn $5, you saved $5.

In the CC example below, you'll see that the call premium was split into two columns. The intrinsic value in the Stock Investment column, reducing the cost basis to the strike price of the call, and the extrinsic value in the Income Generated column. The $120.00 intrinsic value is back into the account, available for reinvestment, and is no longer part of the CC position. When accounting for it in this manner, the cost basis of the CC becomes the same as the cost basis of the CSP, which is the strike price, and the extrinsic value represents the true income generated, making it easier for comparison.

Below are the details of both positions. I'll provide ongoing updates as the positions are managed.

CC Position Summary

Aeropostale (ARO). All prices include IB commissions.

Cost Basis	($1,200.00)
Income Generated	$14.52
Percent Income Generated	1.21%
Annualized Income Generated	20.08%
Net Profit If Successful	$14.52
Percent Return If Successful	1.21%
Annualized Return If Successful	20.08%
Days Held to Expiration	22 days

Trade History

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
11/29/2012	ARO	Initial Stock Position	BTO 100 ARO @ 13.20		($1,320.00)
11/29/2012	ARO	Initial Call Option	STO 1 Dec12 12.00 Call @ 1.35		$120.00	$14.52
12/21/2012	ARO		Totals		($1,200.00)	$14.52
DTE	22		Percent Income/Annualized		1.21%	20.08%

CSP Position Summary

Aeropostale (ARO). All prices include IB commissions.

Cost Basis	($1,200.00)
Income Generated	$14.12
Percent Income Generated	1.18%
Annualized Income Generated	19.52%
Net Profit If Successful	$14.12
Percent Return If Successful	1.18%
Annualized Return If Successful	19.52%
Days Held to Expiration	22 days

Trade History

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
11/29/2012	ARO	CSP Margin Used	BTO 100 ARO @ 12.00		($1,200.00)
11/29/2012	ARO	Initial Put Option	STO 1 Dec12 12.00 Put @ 0.14			$14.12
12/21/2012	ARO		Totals		($1,200.00)	$14.12
DTE	22		Percent Income/Annualized		1.18%	19.52%

VRSN - New Position

A new CSP position was established today on VeriSign (VRSN). All prices include IB commissions.

This is a position which requires a minimum of 15% Downside Protection and 15% Annualized Return.

Criteria	Value
Downside Protection	37.73%
Annualized Return	16.90%
Fair Value Estimate	$48.00
Target Buy Price	$28.80
Target Margin of Safety	40.00%
Actual Buy Price	$25.00
Actual Margin of Safety	47.92%

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
11/26/2012	VRSN	CSP Margin Used	CSP 100 VRSN @ 25.00		($2,500.00)
11/26/2012	VRSN	Initial Put Option	STO 1 Dec12 25.00 Put @ 0.29			$28.94

Position Summary

Cost Basis	($2,500.00)
Income Generated	$28.94
Percent Income Generated	1.16%
Annualized Income Generated	16.90%
Net Profit If Assigned	$28.94
Percent Return If Assigned	1.16%
Annualized Return If Assigned	16.90%
Days Held to Expiration	25 days