SPY - New Position

A new CSP position was established today on SPDR S&P 500 ETF (SPY). All prices include IB commissions.

This position is to test a new strategy of selling puts at least 15% OTM on SPY as an alternative to holding excess cash. The goal is to earn an annualized return equivilent to a 10 Year US Treasury in 30 days or less. With interest rates near zero for an extended period, I'm not earning any interest on the cash in my account. There are not a lot of choices for short term investments which can match 10 Year Treasuries, so I did a study of the S&P 500 closing prices at each option expiration since 1950. The study showed that there have only been 13 months, in the past 60 years, where the S&P 500 has declined by 10% or more, only 2 months where it declined by 15% or more, and only 1 month where it declined by 20% or more (Oct 2008).

Since I want to get as close to a risk free position as posible, 15% downside protection for a 1 month SPY Put seems to be a reasonably safe level, based on the performance of the past 60 years. However, as we all should know by now, past performance is not necessarily indicative of future results. Oct 2008 proved to be one of those times, with the largest 1 month decline in 60 years at 25.1%.

I'm going to test this theory for the next few months with a 100 share position. If it works out well, I'll increase the position size to put more of my idle cash to work when there are no other opportunities available. This month I decided to use the Sep quarterly expiration rather then the normal expiration since it provided better downside protection and a better annualized return.

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
8/24/2010	SPY	CSP Margin Used	CSP 100 SPY @ 87.00		($8,700.00)
8/24/2010	SPY	Initial Put Option	STO 1 Sep10 87.00 Put @ 0.25			$24.99

Position Summary

Cost Basis	($8,700.00)
Income Generated	$24.99
Percent Income Generated	0.29%
Annualized Income Generated	2.91%
Net Profit If Assigned	$24.99
Percent Return If Assigned	0.29%
Annualized Return If Assigned	2.91%
Days Held to Expiration	36 days

PG - New Position

A new CSP position was established today on Procter and Gamble (PG). All prices include IB commissions.

This position replaces the one I closed on Monday.

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
8/24/2010	PG	CSP Margin Used	CSP 100 PG @ 60.00		($6,000.00)
8/24/2010	PG	Initial Put Option	STO 1 Sep10 60.00 Put @ 1.00			$100.24

Position Summary

Cost Basis	($6,000.00)
Income Generated	$100.24
Percent Income Generated	1.67%
Annualized Income Generated	25.41%
Net Profit If Assigned	$100.24
Percent Return If Assigned	1.67%
Annualized Return If Assigned	25.41%
Days Held to Expiration	24 days

MDT - New Position

A new CSP position was established today on Medtronic Inc (MDT). All prices include IB commissions.

This is the second position on MDT. The first position is a CC.

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
8/24/2010	MDT	CSP Margin Used	CSP 100 MDT @ 30.00		($3,000.00)
8/24/2010	MDT	Initial Put Option	STO 1 Sep10 30.00 Put @ 0.58			$58.04

Position Summary

Cost Basis	($3,000.00)
Income Generated	$58.04
Percent Income Generated	1.93%
Annualized Income Generated	29.42%
Net Profit If Assigned	$58.04
Percent Return If Assigned	1.93%
Annualized Return If Assigned	29.42%
Days Held to Expiration	24 days

ITW - New Position

A new CSP position was established today on Illinois Tool Works Inc (ITW). All prices include IB commissions.

This is the second CSP position on ITW.

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
8/24/2010	ITW	CSP Margin Used	CSP 100 ITW @ 37.50		($3,750.00)
8/24/2010	ITW	Initial Put Option	STO 1 Oct10 37.50 Put @ 0.68			$68.24

Position Summary

Cost Basis	($3,750.00)
Income Generated	$68.24
Percent Income Generated	1.82%
Annualized Income Generated	12.77%
Net Profit If Assigned	$68.24
Percent Return If Assigned	1.82%
Annualized Return If Assigned	12.77%
Days Held to Expiration	52 days

GD - New Position

A new CSP position was established today on General Dynamics Corporation (GD). All prices include IB commissions.

This is the second position on GD. The first position is a CC.

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
8/24/2010	GD	CSP Margin Used	CSP 100 GD @ 50.00		($5,000.00)
8/24/2010	GD	Initial Put Option	STO 1 Oct10 50.00 Put @ 0.56			$56.24

Position Summary

Cost Basis	($5,000.00)
Income Generated	$56.24
Percent Income Generated	1.12%
Annualized Income Generated	7.90%
Net Profit If Assigned	$56.24
Percent Return If Assigned	1.12%
Annualized Return If Assigned	7.90%
Days Held to Expiration	52 days

ADP - New Position

A new CSP position was established today on Automatic Data Processing (ADP). All prices include IB commissions.

This is the second position on ADP. The first position is a CC.

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
8/24/2010	ADP	CSP Margin Used	CSP 100 ADP @ 36.00		($3,600.00)
8/24/2010	ADP	Initial Put Option	STO 1 Oct10 36.00 Put @ 0.49			$48.99

Position Summary

Cost Basis	($3,600.00)
Income Generated	$48.99
Percent Income Generated	1.36%
Annualized Income Generated	9.55%
Net Profit If Assigned	$48.99
Percent Return If Assigned	1.36%
Annualized Return If Assigned	9.55%
Days Held to Expiration	52 days

TGT - Closed

The Target (TGT) CSP position was closed today. All prices include IB commissions.

Position Summary

Cost Basis	$4,500.00
Net Profit	$169.03
Percent Return	3.76%
Annualized Return	14.59%
Days Held to Expiration	94 days

Trade History

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
5/21/2010	TGT	CSP Margin Used	CSP 100 TGT @ 45.00		($4,500.00)
5/21/2010	TGT	Initial Put Option	STO 1 Sep10 45.00 Put @ 2.08	Closed		$207.99
8/23/2010	TGT	Buy Back	BTC 1 Sep10 45.00 Put @ -0.39			($38.96)
8/23/2010	TGT	CSP Margin Returned	CSP 100 TGT @ -45.00			$4,500.00
8/23/2010	TGT		Net Cost/Profit-Loss		($4,500.00)	$169.03
DTE	94		Percent Profit-Loss/Annualized		3.76%	14.59%

PG - Closed

The Procter and Gamble (PG) CSP position was closed today. All prices include IB commissions.

Position Summary

Cost Basis	$5,250.00
Net Profit	$122.13
Percent Return	2.33%
Annualized Return	9.03%
Days Held to Expiration	94 days

Trade History

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
5/21/2010	PG	CSP Margin Used	CSP 100 PG @ 52.50		($5,250.00)
5/21/2010	PG	Initial Put Option	STO 1 Oct10 52.50 Put @ 1.48	Closed		$148.14
8/23/2010	PG	Buy Back	BTC 1 Oct10 52.50 Put @ -0.26			($26.01)
8/23/2010	PG	CSP Margin Returned	CSP 100 PG @ -52.50			$5,250.00
8/23/2010	PG		Net Cost/Profit-Loss		($5,250.00)	$122.13
DTE	94		Percent Profit-Loss/Annualized		2.33%	9.03%

PEP - Closed

The PepsiCo Inc (PEP) CSP position was closed today. All prices include IB commissions.

Position Summary

Cost Basis	$5,750.00
Net Profit	$200.18
Percent Return	3.48%
Annualized Return	13.52%
Days Held to Expiration	94 days

Trade History

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
5/21/2010	PEP	CSP Margin Used	CSP 100 PEP @ 57.50		($5,750.00)
5/21/2010	PEP	Initial Put Option	STO 1 Oct10 57.50 Put @ 2.37	Closed		$237.14
8/23/2010	PEP	Buy Back	BTC 1 Oct10 57.50 Put @ -0.37			($36.96)
8/23/2010	PEP	CSP Margin Returned	CSP 100 PEP @ -57.50			$5,750.00
8/23/2010	PEP		Net Cost/Profit-Loss		($5,750.00)	$200.18
DTE	94		Percent Profit-Loss/Annualized		3.48%	13.52%

KO - Adjustment

The following adjustment was made on today on Coca Cola Company (KO). All prices include IB commissions.

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
8/20/2010	KO	Buy Back and Roll Out	BTC 1 Aug10 55.00 Call @ -0.30			($30.01)
8/20/2010	KO	Continued Trade	STO 1 Sep10 55.00 Call @ 1.05			$104.54

Current Position Summary

Cost Basis	($5,500.00)
Income Generated	$516.48
Percent Income Generated	9.39%
Annualized Income Generated	13.03%
Net Profit If Assigned	$516.48
Percent Return If Assigned	9.39%
Annualized Return If Assigned	13.03%
Days Held to Expiration	263 days

Trade History

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
12/28/2009	KO	CSP Margin Used	CSP 100 KO @ 55.00		($5,500.00)
12/28/2009	KO	Initial Put Option	STO 1 Feb10 55.00 Put @ 0.67	Expired		$67.00
2/22/2010	KO	Continued Trade	STO 1 Mar10 55.00 Put @ 0.85	Exercised		$84.99
3/19/2010	KO	CSP Margin Returned	CSP 100 KO @ -55.00		$5,500.00
3/19/2010	KO	Stock Assigned	EX 1 Mar10 55.00 Put @ -55.00		($5,500.00)
4/5/2010	KO	Continued Trade	STO 1 Apr10 55.00 Call @ 0.46			$45.99
4/16/2010	KO	Buy Back and Roll Out	BTC 1 Apr10 55.00 Call @ -0.08			($8.01)
4/16/2010	KO	Continued Trade	STO 1 May10 55.00 Call @ 1.17	Closed		$116.99
5/21/2010	KO	Buy Back and Roll Out	BTC 1 May10 55.00 Call @ -0.01			($1.00)
5/21/2010	KO	Continued Trade	STO 1 Aug10 55.00 Call @ 0.92	Closed		$91.99
7/1/2010	KO	Dividend Received	DIV 100 Dividend @ 0.44			$44.00
8/20/2010	KO	Buy Back and Roll Out	BTC 1 Aug10 55.00 Call @ -0.30			($30.01)
8/20/2010	KO	Continued Trade	STO 1 Sep10 55.00 Call @ 1.05			$104.54
9/17/2010	KO		Totals		($5,500.00)	$516.48
DTE	263		Percent Income/Annualized		9.39%	13.03%

PAYX - New Position

A new CC position was established today on Paychex Inc (PAYX). All prices include IB commissions.

Criteria for Selection:

• Dividend Champions Status = Contender (Deleted 10/18/10)
  
• Years of Consectutive Dividend Increases = 20
  
• Years of Positive Free Cash Flow (last 10 years) = 10
  
• Discount to Morningstar's Fair Value Estimate = 37%
  

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
8/2/2010	PAYX	Initial Stock Position	BTO 200 PAYX @ 26.24		($5,247.00)
8/2/2010	PAYX	Initial Call Option	STO 2 Dec10 27.50 Call @ 0.74			$148.57

Position Summary

Cost Basis	($5,247.00)
Income Generated	$148.57
Percent Income Generated	2.83%
Annualized Income Generated	7.54%
Net Profit If Assigned	$401.57
Percent Return If Assigned	7.65%
Annualized Return If Assigned	20.39%
Days Held to Expiration	137 days

MDT - Adjustment

The following adjustment was made today on Medtronic Inc (MDT). All prices include IB commissions.

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
8/2/2010	MDT	Buy Back and Roll Out/Down	BTC 1 Aug10 44.00 Call @ -0.04			($3.96)
8/2/2010	MDT	Continued Trade	STO 1 Nov10 42.00 Call @ 0.44			$44.04

Current Position Summary

Cost Basis	($4,400.00)
Income Generated	$294.96
Percent Income Generated	6.70%
Annualized Income Generated	11.54%
Net Profit If Assigned	$94.96
Percent Return If Assigned	2.16%
Annualized Return If Assigned	3.72%
Days Held to Expiration	212 days

Trade History

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
4/21/2010	MDT	CSP Margin Used	CSP 100 MDT @ 44.00		($4,400.00)
4/21/2010	MDT	Initial Put Option	STO 1 May10 44.00 Put @ 0.94	Exercised		$94.14
5/21/2010	MDT	CSP Margin Returned	CSP 100 MDT @ -44.00		$4,400.00
5/21/2010	MDT	Stock Assigned	EX 1 May10 44.00 Put @ -44.00		($4,400.00)
5/21/2010	MDT	Continued Trade	STO 1 Aug10 44.00 Call @ 1.38	Closed		$138.24
7/30/2010	MDT	Dividend Received	DIV 100 Dividend @ 0.23			$22.50
8/2/2010	MDT	Buy Back and Roll Out/Down	BTC 1 Aug10 44.00 Call @ -0.04			($3.96)
8/2/2010	MDT	Continued Trade	STO 1 Nov10 42.00 Call @ 0.44			$44.04
11/19/2010	MDT		Totals		($4,400.00)	$294.96
DTE	212		Percent Income/Annualized		6.70%	11.54%

LLTC - Closed

The Linear Technology Corp (LLTC) position was closed today. All prices include IB commissions.

Linear Technology Corp was near fair value so, as per my trading plan, I decided to close it and look for a new opportunity.

Position Summary

Cost Basis	$5,600.00
Net Profit	$494.64
Percent Return	8.83%
Annualized Return	44.16%
Days Held to Expiration	73 days

Trade History

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
5/21/2010	LLTC	CSP Margin Used	CSP 200 LLTC @ 28.00		($5,600.00)
5/21/2010	LLTC	Initial Put Option	STO 2 Aug10 28.00 Put @ 2.61			$522.87
8/2/2010	LLTC	Buy Back	BTC 2 Aug10 28.00 Put @ -0.14			($28.23)
8/2/2010	LLTC	CSP Margin Returned	CSP 200 LLTC @ -28.00			$5,600.00
8/2/2010	LLTC		Net Cost/Profit-Loss		($5,600.00)	$494.64
DTE	73		Percent Profit-Loss/Annualized		8.83%	44.16%

EXPD - Closed

The Expeditors International (EXPD) position was closed today. All prices include IB commissions.

Expeditors International was near fair value so, as per my trading plan, I decided to close it and look for a new opportunity.

Position Summary

Cost Basis	$3,750.00
Net Profit	$274.13
Percent Return	7.31%
Annualized Return	36.55%
Days Held to Expiration	73 days

Trade History

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
5/21/2010	EXPD	CSP Margin Used	CSP 100 EXPD @ 37.50		($3,750.00)
5/21/2010	EXPD	Initial Put Option	STO 1 Aug10 37.50 Put @ 2.90			$290.14
8/2/2010	EXPD	Buy Back	BTC 1 Aug10 37.50 Put @ -0.16			($16.01)
8/2/2010	EXPD	CSP Margin Returned	CSP 100 EXPD @ -37.50			$3,750.00
8/2/2010	EXPD		Net Cost/Profit-Loss		($3,750.00)	$274.13
DTE	73		Percent Profit-Loss/Annualized		7.31%	36.55%

DOV - Closed

The Dover Corp (DOV) position was closed today. All prices include IB commissions.

Dover Corp was near fair value so, as per my trading plan, I decided to close it and look for a new opportunity.

Position Summary

Cost Basis	$4,000.00
Net Profit	$227.78
Percent Return	5.69%
Annualized Return	28.47%
Days Held to Expiration	73 days

Trade History

Date	Stock	Description	Transaction	Status	Stock Investment	Income Generated
5/21/2010	DOV	CSP Margin Used	CSP 100 DOV @ 40.00		($4,000.00)
5/21/2010	DOV	Initial Put Option	STO 1 Sep10 40.00 Put @ 2.50			$249.54
8/2/2010	DOV	Buy Back	BTC 1 Sep10 40.00 Put @ -0.22			($21.76)
8/2/2010	DOV	CSP Margin Returned	CSP 100 DOV @ -40.00			$4,000.00
8/2/2010	DOV		Net Cost/Profit-Loss		($4,000.00)	$227.78
DTE	73		Percent Profit-Loss/Annualized		5.69%	28.47%