Today, 9/2/10 I BTC 2 BRCD Sep10 5 Covered Calls and STO 2 Jan11 5 Covered Calls for a net deposit of $32.95 in my taxable account.  My basis for these BRCD shares is now 9.82.  This transaction represents a simple return of 1.15% and an annualized return of 2.97% on my basis.

Thomson Reuters continues to rate BRCD as Under Perform as recently as 8/31/10 while S&P has reduced its 12 month price target to 5.00 from 5.50 and has a 3 star out of 5 rating for BRCD.  Market Edge Second Opinion has a price opinion of 5.04 and a neutral rating for BRCD.

When I sole the Sep10 Covered Calls in July, I thought that I might need to roll BRCD out and had hoped that I might be able to roll it up at the same time.  As it turns out I would need to pay to roll the strike up so decided to just roll it out.  The various analyst research reports are supportive of just rolling the Calls out.  On the other hand, BRCD is in essentially the same business as 3PAR which was recently bid up by HPQ and DELL.  There certainly exists the real possibility that somebody will come along and make a bid for BRCD which would leave my $5 strike price in the dust.  I suspect that it is this possibility that has caused BRCD to run up 70 cents or so in the past week.

BRCD does not pay a dividend and has been a real laggard in my accounts.  I will be quite happy for it to be called away one day.

Many of the stocks that I own and write Covered Calls upon also pay dividends.  Dividends occur on a regular basis and add significantly to my annual investment income.  Year to date I have received a total of $4,542.64 in dividends in my various accounts for 2010.  My year to date average monthly dividends received is currently $567.83.  The year-to-date dividends currently represent 27.41% of my monthly investment cash flow and 1.84% return on my current basis value.

My August dividends are down from last year because of the BP decision to not pay a 3^rd quarter dividend as a result of the Gulf oil spill.  Normally I would have received an additional $420 in BP dividends in August.  I anticipate that BP will also not pay its regular dividend in November which will be another $420 hit.  During August, I have received notice of the following dividends paid in various accounts for a total of $255.46. 

Please notice that PGF is an ETF and pays dividends monthly.  The annualized dividend yield for PGF is based upon the simple and false assumption that it will pay the same dividend each month for the next 12 months.  The actual annualized dividend yield may be more or less than illustrated here.

I use my basis per share to determine the simple and annualized percentage return because I feel that it gives me a better representation of the value of the dividends as they relate to my portfolio.  My basis may be above or below the market price which causes my return to be lower or higher than published yields for a stock.  I calculate my basis per share as my acquisition price less any option premiums received on those shares.  I do not use dividends to reduce my basis.

Today, 8/27/10, I sold 4 VLO Oct10 18 Covered Calls for a net deposit of $82.92 in an IRA account.  My basis for these VLO shares is now 34.07, excluding dividends received.  This transaction represents a simple return of about .61% and an annualized return of about 4.48% on my basis.

S&P currently has reduced its 12 month target to $19 from $22 for VLO.  VLO has had a 52 week high of 21.54 and a low of 15.55.  It seems to have had a lot of resistance near or just above 21 over the past year but the trend has been down with recent resistance between $18.50 and $19.  My Aug Calls were written in Jun10 for the 20 strike and expired worthless.  I only went out 2 months again but lowered my strike by $2.  If need be I will be able to roll the October Calls out and possible up for an additional deposit in my account.

Since 2009 then I have received $160 in total dividends from VLO.  VLO reduced its dividend to .05 from .15 with its Mar10 payout.  I am hopeful that the higher dividend will be reinstated one day.  In the meantime I will continue to hold and write Covered Calls on the stock.