The document provides an income report on covered call recommendations for the month of April. It summarizes 8 covered call trades on stocks and ETFs, including the current price, strike price, premium, option type, yield if exercised, and stop loss. The trades are designed to generate average monthly returns of over 3% while providing downside protection given current market volatility. A majority of the calls are written in-the-money to balance yield and protection of capital.

1. Covered Calls Income Report 17th March 2011
MARKET OVERVIEW
S&P 500 Index
Intermarket Overview (1 Month)
S&P 500 83.55 DJIA 455.20 $AUD/$USD 0.0206 GOLD 21.96
1,256.88 -6.23% 11,613.30 -3.77% $US0.9794 -2.06% $US1394.20 +1.60%
NASDAQ 214.76 VIX 12.81 ALL ORDS 385.20 OIL 12.90
2,616.82 -7.58% 29.40 +77.22% 4640.80 +7.66% $US97.21 +15.30%
The markets have become unsettled over the past month due to the catastrophic earthquake / tsunami in
Japan as it continues to avert a nuclear disaster. This combined with continuing tensions in the Middle East
and further deterioration of European sovereign debt have rattled equity markets from their February highs as
volatility in the market accelerates. The VIX (volatility index), also known as Wall Street’s fear gauge, has
increased over 70% in the past month alone. The VIX being high results in higher premiums received from
writing call options.
The US economic recovery is well under way as it is now becoming self sustainable with strong economic data
emerging every week. However the US market along with the Australian and European equity markets have
entered into a corrective phase due to fear, whilst commodity markets continue to boom with oil peaking at
US$105 a barrel before falling back to around the US$100 mark. Political tensions in the Middle East and North
Africa are still hanging in the balance, which will continue to keep oil prices high as investors also remain
uncertain about supply and demand fundamental stemming from Japan’s disaster.
Despite US underlying inflation remaining low, food and energy prices continued to surge for the month
causing riots in the Middle East. Emerging economies such as China and India have had to raise interest rates
to stem rising commodity prices. The US Federal Reserve continues to print money through its QE2 program
which is devaluing their currency adding fuel to commodity prices such as oil and gold which are denominated
in US dollars.
Since the disaster in Japan the Nikkei has been pushed to near record lows as fear about a nuclear meltdown
send panic through the markets world-wide. However prudent investors should be careful not to get caught up

2. in the media hype and instead look for clear trading opportunities. You only have to look at the Eurozone debt
crisis of mid 2010 or the BP oil spill to see how investors react to constant negative media and the subsequent
rebound in prices once the issue is no longer top story.
“Be fearful when others are greedy and greedy when others are fearful” - Warren Buffet
This report has chosen to recommend only eight covered calls for the April expiry with the majority of call’s
being written one or two strike prices In The Money (ITM) to offer greater downside protection against the
current volatile market while still returning on average just over 3% for the month.
Trade Well
Daniel Rooney
MARCH Covered Call Recommendations
Code Stock Current Strike Premium Option Call Break Yield If Stop
Price (Time Type Yield Even Exercised Loss
Value)
BHP BHP Billiton Ltd. $84.88 85.00 $3.50 OTM 4.12% 81.38 4.26% 77.31
(NYSE)
CELG Celgene Corporation $52.88 52.50 $1.76 ITM 3.33% 50.74 3.33% 48.20
CTRP Ctrip.com $37.01 36.00 $1.39 ITM 3.76% 34.61 3.76% 32.88
International Ltd.
MSFT Microsoft Corp. $24.79 24.00 $0.53 ITM 2.14% 23.47 2.14% 22.30
ORCL Oracle Corp $30.20 29.00 $0.83 ITM 2.75% 28.17 2.75% 26.76
TBT ProShares UltraShort $36.10 36.00 1.24 ITM 3.43% 34.76 3.43% 33.02
20+ Year Treasury
USO Unites States Oil $39.68 38.00 1.03 ITM 2.60% 36.97 2.60% 35.12
Fund
V Visa Inc. $70.96 70.00 $2.03 ITM 2.86% 67.97 2.86% 64.57
*N.B Please read the ‘Strategy Disclaimer’ found on the last page of this report before trading. Prices can change from the release
date of this report to when trades are placed on entry resulting in different yields to the above stated. It is ideal that orders are
placed whilst the market is open to ensure orders are filled as close as possible to the desired price.
PLACE YOUR BUY AND SELL TRADES THROUGH
Alcazar International Pty Ltd
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3. BHP Billiton Ltd. ADR (NYSE)
Code Current Strike Premium Option Yield Break Yield If Stop
Price (TV) Type Even Exercised Loss
BHP $84.88 85.00 $3.50 OTM 4.12% 81.38 4.26% 77.31
COMPANY OVERVIEW:
BHP Billiton is a diversified miner that supplies aluminium, coal, copper, iron ore, mineral sands, oil, gas, nickel,
diamonds, uranium, and silver. BHP Billiton is a global leader in the resources industry.
FUNDAMENTALS:
Market Capitalisation $236.15 Billion Sales Growth past 5 Years 14.59%
EPS (past 12 months) 6.13 Return on Equity 34.21%
EPS Growth next 5 Years 14.75% Net Profit Margin 28.03%
TRADE PROFILE:
The US recovery from recession combined with China’s strong growth and demand for resources have helped
BHP share price recover from its post GFC low of $25 as it continues to benefit from soaring commodity prices.
BHP enjoys a healthy net profit margin of approximately 28% with sales growth over the past 5 years annually
averaging just under 15%. An Out of The money Call Option yielding 4.12% would place the break even of
$81.38 well under the past 3 months support level.
ORDER Example: (N.B 1 US option contract = 100 shares)
- Buy 100 BHP (NYSE) Shares @ $84.88
- Sell 1 BHP 85.00 April Call @ $3.50
Celgene Corporation (NASDAQ)

4. Code Current Strike Premium Option Yield Break Yield If Stop
Price (TV) Type Even Exercised Loss
CELG $52.88 52.50 $1.76 ITM 3.33% 50.74 3.33% 48.20
COMPANY OVERVIEW:
Celgene is a biopharmaceutical firm that discovers, develops, and markets therapeutics for the treatment of
cancer and immunological diseases. Acquisitions have brought MDS drug Vidaza, T-cell lymphoma drug
Istodax, and breast cancer drug Abraxane.
FUNDAMENTALS:
Market Capitalisation $24.58 Billion Sales Growth past 5 Years 46.52%
EPS (past 12 months) 1.88 Return on Equity 16.97%
EPS Growth next 5 Years 24.54% Net Profit Margin 24.28%
TRADE PROFILE:
Celgene is in the midst of a global expansion led by its continued organic growth of existing drug and recent
acquisitions adding strength to its portfolio. The company has ample cash reserves with a current ratio of 4.06
which could be used for additional acquisitions in the near future keeping sales moving higher. Celgene being a
health care stock offers a higher degree of safety in volatile markets as an In The Money (ITM) call option
offers greater downside protection with a break even lying on strong support just above the $50 price.
ORDER Example: (N.B 1 US option contract = 100 shares)
- Buy 100 CELG Shares @ $52.88
- Sell 1 CELG 52.50 April Call @ $2.14
Ctrip.com International Ltd. (NASDAQ)

5. Code Current Strike Premium Option Yield Break Yield If Stop
Price (TV) Type Even Exercised Loss
CTRP $37.01 36.00 $1.39 ITM 3.76% 34.61 3.76% 32.88
COMPANY OVERVIEW:
Ctrip.com is the dominant provider of travel services for hotel accommodations, airline tickets, and packaged
tours in China. Nearly a third of its current sales come through the online channel, while the other 70% is
from call centres.
FUNDAMENTALS:
Market Capitalisation $5.47 Billion Sales Growth past 5 Years 40.61%
EPS (past 12 months) 1.06 Return on Equity 23.22%
EPS Growth next 5 Years 28.54% Net Profit Margin 34.22%
TRADE PROFILE:
With China’s online market expected to top RMB 5.4 billion in 2010 and triple to RMB 15.91 billion by 2013,
makes Ctrip.com a very attractive company as over a third of its business comes from online transactions.
Earnings per share have grown by 31.62% over the past 5 years as similar projections are anticipated over the
coming 5 years. Writing an ITM call at the 36.00 strike will offer a 6.48% buffer to our breakeven price whilst
yielding a 3.76% return.
ORDER Example: (N.B 1 US option contract = 100 shares)
- Buy 100 CTRP Shares @ $37.01
- Sell 1 CTRP 36.00 April Call @ $2.40
Microsoft Corp. (NASDAQ)

6. Code Current Strike Premium Option Yield Break Yield If Stop
Price (TV) Type Even Exercised Loss
MSFT $24.79 24.00 $0.53 ITM 2.14% 23.47 2.14% 22.30
COMPANY OVERVIEW:
Microsoft develops the Windows operating system and the Office suite of productivity software. Windows and
Office account for roughly 56% of Microsoft's revenue, with another 24% coming from software for enterprise
servers.
FUNDAMENTALS:
Market Capitalisation $208.30 Billion Sales Growth past 5 Years 9.45%
EPS (past 12 months) 2.36 Return on Equity 44.34%
EPS Growth next 5 Years 10.55% Net Profit Margin 30.84%
TRADE PROFILE:
Microsoft is one of the largest tech giants which is piling up cash at a furious rate. It has also engaged in
aggressive share repurchasing since 2006 buying back just under 1.5 billion shares. Fundamentally the
company is sound but has had a major pull back in share price over the past 3 months which has created an
opportunity to write the 24.00 covered call putting the break-even close to the 52 week low.
ORDER Example: (N.B 1 US option contract = 100 shares)
- Buy 100 MSFT Shares @ $24.79
- Sell 1 MSFT 24.00 April Call @ $1.32
Oracle Corp. (NASDAQ)

7. Code Current Strike Premium Option Yield Break Yield If Stop
Price (TV) Type Even Exercised Loss
ORCL $30.20 29.00 $0.83 ITM 2.75% 28.17 2.75% 26.76
COMPANY OVERVIEW:
Oracle sells a wide range of enterprise IT solutions, including databases, middleware, applications, and
hardware. Software license updates and product support, the most profitable segment of its operations,
account for almost than 50% of total revenue.
FUNDAMENTALS:
Market Capitalisation $152.58 Billion Sales Growth past 5 Years 17.85%
EPS (past 12 months) 1.33 Return on Equity 21.87%
EPS Growth next 5 Years 14.02% Net Profit Margin 21.18%
TRADE PROFILE:
Oracle has an active acquisition program that is a fundamental component of the company's overall strategy,
spending more than $34 billion in acquisitions since fiscal 2005. The recent correction in Oracle’s price is seen
as a buying opportunity as the company is fundamentally sound and relatively stable. An ITM call has been
written to lower the break-even level whilst still returning a healthy 2.75% for the month.
ORDER Example: (N.B 1 US option contract = 100 shares)
- Buy 100 ORCL Shares @ $30.20
- Sell 1 ORCL 29.00 April Call @ $2.03
ProShares UltraShort 20+ Year Treasury. (NYSE)

8. Code Current Strike Premium Option Yield Break Yield If Stop
Price (TV) Type Even Exercised Loss
TBT $36.10 36.00 $1.24 ITM 3.43% 34.76 3.43% 33.02
COMPANY OVERVIEW:
ProShares UltraShort Lehman 20+ Treasury TBT is primarily an ETF holding for investors with a high-conviction
belief that long-dated US Treasury bonds will drop in value as Treasury yields rise.
TECHNICAL:
52 Week Low $29.77 Average Trading Range 0.89
52 Week High $50.68 Volatility (week) 2.39%
Average Volume 15.38 Million Volatility (month) 1.91%
TRADE PROFILE:
Investors interested in this fund essentially think the unprecedented moves by the Federal Reserve’s
quantitative easing program will cause an increase in inflation making fixed investments such as long-dated
bonds undesirable causing TBT to increase. With commodity prices continuing to push to new heights and the
US printing more money than it has ever done in history are all indicating that inflation is imminent. An ITM
Covered Call at the 36.00 strike offers an impressive yield of 3.43% with good downside protection.
ORDER Example: (N.B 1 US option contract = 100 shares)
- Buy 100 TBT Shares @ $36.10
- Sell 1 TBT 36.00 April Call @ $1.34
United States Oil Fund. (NYSE)

9. Code Current Strike Premium Option Yield Break Yield If Stop
Price (TV) Type Even Exercised Loss
USO $39.68 38.00 $1.03 ITM 2.60% 36.97 2.60% 35.12
COMPANY OVERVIEW:
United States Oil (USO) is an ETF that is designed to track the price movements of light, sweet crude oil.
TECHNICAL:
52 Week Low $30.93 Average Trading Range 1.03
52 Week High $42.83 Volatility (week) 2.32%
Average Volume 14.57 Million Volatility (month) 2.38%
TRADE PROFILE:
With unrest in the Middle East combined with the improving economy of the US has caused investors looking
to hedge against inflation buying oil. Speculators have also recently flooded the oil market with the price of oil
now over US$100 per barrel. The Federal Reserve continues to print money through its Quantitative Easing
program, devaluing the US dollar, which is placing upwards pressure on the price of oil as it is denominated in
US dollars. With oil prices likely to remain high a 38.00 covered call will be written ITM to offset any short term
price volatility.
ORDER Example: (N.B 1 US option contract = 100 shares)
- Buy 100 USO Shares @ $39.68
- Sell 1 USO 38.00 April Call @ $2.71
Visa Inc. (NYSE)

10. Code Current Strike Premium Option Yield Break Yield If Stop
Price (TV) Type Even Exercised Loss
V $70.96 70.00 $2.03 ITM 2.86% 67.97 2.86% 64.57
COMPANY OVERVIEW:
Visa manages a group of global payment card brands, which it licenses to financial institutions that issue cards
to their customers. The firm acts as the payment processor by facilitating the authorization, clearing, and
settlement of transactions on its proprietary networks. Visa maintains the largest card scheme in the world.
FUNDAMENTALS:
Market Capitalisation $50.57 Billion Sales Growth past 5 Years 24.79%
EPS (past 12 months) 3.69 Return on Equity 12.60%
EPS Growth next 5 Years 18.42% Net Profit Margin 36.98%
TRADE PROFILE:
Visa is a company with strong fundamentals with earnings growth over the past ranging between 15% to 20%
and a net profit margin of 36.98%. In addition Visa is a good buy from a technical perspective as it trades 10%
above its 52 week low. The recent fears about limits on debit card fees are overblown as the regulatory action
will impact banks much more than Visa. The ITM 70.00 strike offers just under a 3% yield with a break even
sitting on strong support.
ORDER Example: (N.B 1 US option contract = 100 shares)
- Buy 100 V Shares @ $70.96
- Sell 1 V 70.00 April Call @ $2.99

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