(5) PUT AND CALL OPTIONS AT FAIR VALUE

9 Months Ended

Sep. 30, 2011

Derivatives and Fair Value [Text Block]

(5) PUT AND CALL OPTIONS AT FAIR VALUE

As part of the Company’s investment strategy, put and call options are sold on various stocks the Company is willing to buy or sell. The premiums received are deferred until such time as they are exercised or expire. These options are marked to market for each reporting period using readily available market quotes, and this fair value adjustment is recorded as a gain or loss in the Statement of Operations.

Upon exercise, the value of the premium will adjust the basis of the underlying security bought or sold. Options that expire are recorded as income in the period they expire.

For the three months ended September 30, 2011, the Company recorded a loss from marking put and call options to market of ($7,819,900). For the three months ended September 30, 2010, the Company recorded a gain from marking put and call options to market of $3,945,415. These amounts are included in the Statements of Operations as part of mark to market of short positions.

For the nine months ended September 30, 2011, the Company recorded a loss from marking put and call options to market of ($11,555,109). For the nine months ended September 30, 2010, the Company recorded a loss from marking put and call options to market of ($1,416,884). These amounts are included in the Statements of Operations as part of mark to market of short positions.

All proceeds of the put and call options which are equity contracts are shown net of the mark to market adjustment in the current liability section of the balance sheet as Put and call options, at fair value.

The following summarizes the Company’s Put and Call Options as of September 30, 2011 (unaudited) and December 31, 2010:

Put and Call Options	Selling Price		Fair Market Value		Unrealized (Loss) Gain
September  30, 2011	$	5,753,963	$	11,777,529	$	(6,023,566	)
December 31, 2010	$	9,896,627	$	4,330,069	$	5,566,558