04/19/23

Big Rules to achieve * annual return target – 2010*(You need to decide what is your target %..mine is 30% as a stretch target)

• *% Annualized Return Target Overall Portfolio• $_______ Maximum investment in any one stock (net of Covered Calls)• Consider Closing Position when 75% call premium captured (will depend on time remaining).• Consider early harvest when call premium captured 90% ITM calls, i.e., roll longer at same strike

price (including LEAP’s)• Ok to write LEAP’s including 2012 if overall annual profit is at least 18-22%.• No limit on number of holdings as long as premium targets are being met.• Ideal write is 15% actual in approximately 6 months. (30% per annum) Will vary depending on

markets.• Consider taxation issues in taxable account (don’t write deep in the money – no more then 1

strike price below current stock price). More aggressive to avoid Wash Sales (pain at tax time).• 2010: Focus on each transaction being a profit including holding positions longer. Apply strategy

of reducing the net investment over time. • Do not write up to capture profits by paying in more capital. Let the position be called and then

decide on replanting crop. Forces a review of all crops and should help avoid shares moving too high and adding more risk. Who wants to risk making more money with an over ripe crop!

• Willing to add stocks to the Compost Pile longer term in line with item directly above.• Keep emotions out of the Covered Calls Farm. Apply solid farming techniques and experience.• Farmer Ron March 2, 2010

• Other Items that help you better manage your farm.