Today, 5/16/12, I BTC 2 NVDA Jun12 $18.00 Covered Calls and STO 2 NVDA Jun12 $14.00 Covered Calls for a net deposit of $56.43 in an IRA account.  My basis for these NVDA shares is now $21.40.  This transaction represents a simple return of about .87% and an annualized return of about 10.26% on my prior basis. 

NVDA is falling with the rest of the market, which has allowed me to roll down the strike price and capture some additional option premium.  This is the time of year when tech stocks tend to decrease in value anyway so I feel good about this roll down.  Of course, it may be that I will need to roll NVDA our and hopefully up if NVDA starts to turn up in a significant way.  Time will tell. 

S&P currently has a 12-month target of $16 for NVDA, down from $19 last October,  with a hold recommendation.  MarketEdge has a price opinion of $14.63, down from $15.46 with an Avoid recommendation.  NVDA has had a 52-week high of $20.05 and a low of $11.47, which is a lower and tighter band than I noted in October 2011.  The 31 Yahoo! Finance analysts have a mean 12-month price target of $16.71, down from an earlier $18.26  with a range of $13 to $22.  It is trading at $12.87 as I write this.

One day I will let NVDA be called away from me and be done with it.  It does not pay a dividend and I do not normally get sufficient option premiums from it to like it for that reason.  For now I continue to hold the stock and sell Covered Calls and am currently a little optimistic that I may actually be able to sell NVDA at a profit one day.  About a year ago, I was of the opinion that it was dead money and that I should let it be called away sooner at a lower strike price and redeploy the money in a better returning investment.

Today, 5/16/12, I BTC 2 ANR Dec12 $20 Covered Calls and STO 2 ANR Sep12 $15 Covered Calls for a net deposit of $56.97 in an IRA account.  My basis for these ANR shares is now $23.34.  These transactions provide a simple return of about 1.21% and an annualized return of about 3.41% on my basis if held to expiration.   

With stock prices falling so much I have recently been reviewing my open Covered Call positions looking for opportunities to roll them in and/or down to generate some additional cash flow.  ANR presented just such an opportunity – again.  In this case, I was able to decrease the strike price by $5 and decrease to time to expiration by 3 months.  I am now underwater on the stock but am confident that if ANR begins to recover that I will be able to roll out and up.  ANR (has have virtually all coal stocks) has fallen so much recently that this is the fifth time in a little less than a year that I have rolled down ANR and three times in the past month.  ANR is a coal company and we all know (or should know) that the current administration has publicly said that they intend to virtually destroy the coal industry.  I suspect that I am safe with this strike price reduction and that these Calls will expire worthless in September 2012.

ANR does not intend to pay a dividend so I might let it be called away eventually.  On the other hand, ANR is turning out to be something of a cash cow from the option premiums; at least it appears so right now.  It may turn out that I can make a decent return by rolling out the Calls or, as I said above, they will expire worthless and I can just sell new Calls.  Time will tell.

As an added thought, I have started to trade ANR.  Last month I purchased some shares and sold the March $16 Covered Calls.  Those shares were called away at a profit.  I also sold March $15 Puts that expired worthless.  I recently made other ANR trades that have not behaved as I hoped.  I have already written about them.

There are 23 Yahoo analysts currently tracking ANR.  They have an average 12-month price target of $22.17, down slightly from last week, with an average recommendation of 2.1 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.  S&P has a 12-month target of $18 and a Hold recommendation.  MarketEdge continues a price opinion of $13.16, down from $16.15 last week and a downgrade recommendation of Avoid from Neutral.  With price targets and recommendations all over the map it appears that the future continues to be up in the air.  However, the trend appears down.

Today, 5/14/12, BTC 1 C Sep12 $35 Covered Call and sold 1 C Aug12 $31 Covered Call for a net deposit of $58.49 in an IRA account.  My basis for these C shares is now $31.45, excluding dividends received.  This transaction represents a simple return of about 1.82% and an annualized return of about 6.93%, if held to maturity.

Just two months ago, I rolled out and up Apr12 $34 Covered Calls to the Sep12 $35 Covered Calls. Now I am rolling down and in those same Sep12 $25 Covered Calls.  Each roll created additional cash flow into the account and reduced my basis in the stock.  I rather like this kind of action.    I hope my current options expire worthless but I would also be quite happy if I need to roll out and up again…for additional cash flow of course.

S&P currently has a 12-month target of $40 for C with a 4 star (Buy) rating.  MarketEdge currently has a price opinion of $33.41 and an Avoid rating.  The 24 Yahoo Analysts have a mean 12-month estimate of $43.87 and a mean recommendation of 2.2 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

C resumed dividend payouts in May 2011 at one cent per quarter.  Prior to that, it last paid a ten cent dividend in January 2009.  I am not considering C as a long term core stock but I still stand to make a reasonable profit just on the Covered Call premiums.