CHS - Adjustment

The following adjustment was made today on CHS:

24-Oct-07 - Buy Back - BTC 1 Nov07 25.00 Call @ -0.04 -
24-Oct-07 - Dollar Cost Averaging - BTO 200 CHS @ 12.66 -
24-Oct-07 - Combined Cost Basis - $5,042.00 300 @ 16.81 -
24-Oct-07 - Interim Trade - STO 3 Dec07 15.00 Call @ 0.39 - Expired

Current Position Summary:

Stock Investment: $5,042.00
Income Generated: $374.90
Percent Income Generated: 7.44%
Annualized Income Generated: 14.67%
Net Profit If Called: -$167.10
Percent Return If Called: -3.31%
Annualized Return If Called: -6.54%
Days to Expiration: 185 days

Trade History:

19-Jun-07 - Initial Stock Position - BTO 100 CHS @ 25.11 -
19-Jun-07 - Initial Call Option - STO 1 Nov07 25.00 Call @ 2.61 - Closed
24-Oct-07 - Buy Back - BTC 1 Nov07 25.00 Call @ -0.04 -
24-Oct-07 - Dollar Cost Averaging - BTO 200 CHS @ 12.66 -
24-Oct-07 - Combined Cost Basis - $5,042.00 300 @ 16.81 -
24-Oct-07 - Interim Trade - STO 3 Dec07 15.00 Call @ 0.39 -

CHS is down about 50% from my original purchase price. Since I still like this company I decided to average down and buy an additional 200 shares, which still keeps me within my 5% position limit. By averaging down I reduced my cost basis from 25.11 to 16.81 (33%), so the stock is now down only 33%, instead of 50%, from my average cost basis. I then sold a Dec 15.00, which is an interim trade, meaning I don't want to let the stock get called away at this price since it'll result in a loss.

This is one reason why I start with small positions and don't commit the entire 5% of capital to a position in the beginning. If a stock declines I can then average down up to the 5% limit, which reduces my cost basis.