Established New Positions in Alcoa Inc., Community Health Systems Inc., and YRC Worldwide Inc.

Yesterday, the Covered Calls Advisor established three short 100% cash-secured Puts positions in Alcoa Inc. (ticker symbol AA), Community Health Systems Inc. (CYH), and YRC Worldwide Inc. (YRCW).  All three positions were established with a March 2015 options expiration date and were sold at somewhat conservative strike prices that provide good downside protection.  The Covered Calls Advisor does not use margin, so the detailed information on these positions and some potential return-on-investment results shown below reflect the fact that these positions were established using 100% cash securitization for the Put options sold.

• The Alcoa Inc. investment will yield a +2.0% absolute return in 27 days (which is equivalent to a +26.4% annualized return-on-investment) if AA closes above the $15.00 strike price on the Mar2015 options expiration date. 
• The Community Health Systems Inc. investment will yield a +2.4% absolute return in 27 days (which is equivalent to a +32.7% annualized return-on-investment) if CYH closes above the $46.00 strike price on the Mar2015 options expiration date. 
• The YRC Worldwide Inc. investment will yield a +9.2% absolute return in 27 days (which is equivalent to a +124.8% annualized return-on-investment) if YRCW closes above the $20.00 strike price on the Mar2015 options expiration date. 

 The details for each of these positions is as follows:

1.  Alcoa Inc. (AA) -- New Position
The transaction was as follows:
02/23/2015  Sold 3 AA Mar2015 $15.00 100% cash-secured Put options @ $.33
Note: The price of AA was $15.47 when this transaction was executed.

A possible overall performance result (including commissions) would be as follows:
100% Cash-Secured Cost Basis: $4,500.00
= $15.00*300

Net Profit:
(a) Options Income: +$87.80
= ($.33*300 shares) - $11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If AA is above $15.00 strike price at Mar2015 expiration): +$0.00
= ($15.00-$15.00)*300 shares

Total Net Profit (If AA is above $15.00 strike price at Mar2015 options expiration): +$87.80
= (+$87.80 +$0.00 +$0.00)

Absolute Return (If AA is above $15.00 strike price at Mar2015 options expiration): +2.0%
= +$87.80/$4,500.00
Annualized Return: +26.4%
= (+$87.80/$4,500.00)*(365/27 days)

The downside 'breakeven price' at expiration is at $14.67 ($15.00 - $.33), which is 5.2% below the current market price of $15.47.
The 'crossover price' at expiration is $15.80 ($15.47 + $.33).  This is the price above which it would have been more profitable to simply buy-and-hold AA until March 20th (the Mar2015 options expiration date) rather than selling these Put options.

2.  Community Health Systems Inc. (CYH) -- New Position
The transaction was as follows:
02/23/2015  Sold 3 CYH Mar2015 $46.00 100% cash-secured Put options @ $1.15
Note: The price of CYH was $47.68 when this transaction was executed.

A possible overall performance result (including commissions) would be as follows:
100% Cash-Secured Cost Basis: $13,800.00
= $46.00*300

Net Profit:
(a) Options Income: +$333.80
= ($1.15*300 shares) - $11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If CYH is above $46.00 strike price at Mar2015 expiration): +$0.00
= ($46.00-$46.00)*300 shares

Total Net Profit (If CYH is above $46.00 strike price at Mar2015 options expiration): +$333.80
= (+$333.80 +$0.00 +$0.00)

Absolute Return (If CYH is above $46.00 strike price at Mar2015 options expiration): +2.4%
= +$333.80/$13,800.00
Annualized Return (If CYH is above $46.00 at expiration): +32.7%
= (+$333.80/$13,800.00)*(365/27 days)

The downside 'breakeven price' at expiration is at $44.85 ($46.00 - $1.15), which is 5.9% below the current market price of $47.68.
The 'crossover price' at expiration is $48.83 ($47.68 + $1.15).  This is the price above which it would have been more profitable to simply buy-and-hold CYH until March 20th (the Mar2015 options expiration date) rather than selling these Put options.

3.  YRC Worldwide Inc. (YRCW) -- New Position
The transaction was as follows:
02/23/2015  Sold 4 YRCW Mar2015 $20.00 100% cash-secured Put options @ $1.30
Note: The price of YRCW was $19.67 when this transaction was executed.

Two possible overall performance results (including commissions) would be as follows:
100% Cash-Secured Cost Basis: $8,000.00
= $20.00*400

Net Profit:
(a) Options Income: +$508.05
= ($1.30*400 shares) - $11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If YRCW stock price is unchanged at $19.67 at Mar2015 expiration): -$132.00
= ($19.67-$20.00)*400 shares; or
(c) Capital Appreciation (If YRCW is above $20.00 strike price at Mar2015 expiration): +$0.00
= ($20.00-$20.00)*400 shares

1. Total Net Profit (If YRCW is unchanged at $19.67 at Mar2015 options expiration): +$606.80
= (+$738.80 +$0.00 -$132.00); or
2. Total Net Profit (If YRCW is above $20.00 strike price at Mar2015 options expiration): +$738.80
= (+$738.80 +$0.00 +$0.00)

1. Absolute Return (If YRCW is unchanged at $19.67 at Mar2015 options expiration): +7.6%
= +$606.80/$8,000.00
Annualized Return: +102.5%
= (+$606.80/$18,000.00)*(365/27 days); or
2. Absolute Return (If YRCW is above $20.00 strike price at Mar2015 options expiration): +9.2%
= +$738.80/$18,000.00
Annualized Return: +124.8%
= (+$738.80/$18,000.00)*(365/27 days)

The downside 'breakeven price' at expiration is at $18.37 ($19.67 - $1.30), which is 9.2% below the current market price of $19.67.
The 'crossover price' at expiration is $20.97 ($19.67 + $1.30).  This is the price above which it would have been more profitable to simply buy-and-hold YRCW until March 20th (the Mar2015 options expiration date) rather than selling these Put options.