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Friday, January 30, 2009

Fluor Corporation -- Continuation Transaction

The following transaction was made to establish a covered calls position against the 600 shares owned in Fluor Corporation (FLR):
01/28/09 Sell-to-Open (STO) 6 FLR Feb09 $45s @ $2.10

The transactions history to date is as follows:
11/24/08 Initial Stock Purchase Transaction -- Bought 600 FLR @ $35.35
11/24/08 Initial Calls Sold Transaction -- Sold 6 FLR Dec08 $35 Calls @ $3.50
12/03/08 Ex-Dividend of $75.00 ($.125*600 shares)
12/05/08 Roll-Up-And-Out Transaction:
Bought to Close 6 FLR Dec08 $35 Calls @ $10.10
Sold to Open 6 FLR Jan09 $45 Calls @ $5.30
01/17/09 Jan09 Options Expired
01/28/09 Continuation Transaction -- Sell-to-Open (STO) 6 FLR Feb09 $45s @ $2.10
Note: The price of FLR was $43.35 when the calls were sold.

The overall performance results(including commissions) for the FLR transactions are as follows:
Stock Purchase Cost: $21,218.95
($35.35*600+$8.95 commission)

Net Profit:
(a) Options Income: +$439.65 (600*($3.50-$10.10+$5.30+$2.10) - 3*$13.45 commissions)
(b) Dividend Income: +$75.00 ($.125*600 shares)
(c) Capital Appreciation (If stock price unchanged): +$4,791.05
= ($43.35-$35.35)*600 - $8.95 commissions
(d) Capital Appreciation (If exercised): +$5,781.05
= ($45.00-$35.35)*600 - $8.95 commissions

Total Net Profit(If stock price unchanged at $43.35): +$5,305.70
= (+439.65 +$75.00 +$4,791.05)
Total Net Profit(If stock price exercised at $45.00): +$6,295.70
= (+$439.65 +$75.00 +$5,781.05)

Absolute Return if Unchanged: +25.0%
Annualized Return If Unchanged (ARIU): +102.55%
(+$5,305.70/$21,218.95)*(365/89 days)

Absolute Return if Exercised: +29.7%
Annualized Return If Exercised (ARIE) +121.7%
(+$6,295.70/$21,218.95)*(365/89 days)