Today, 1/26/12, I bought 60 C at a net cost of $30.78 per share to increase my holdings to 100 shares.  I then sold 1 C Feb12 $32 Covered Call for a net deposit of $48.24 in an IRA account.  My basis for these C shares is now $33.27, excluding dividends received.  This transaction represents a simple return of about 1.43% and an annualized return of about 22.66% on my averaged down prior basis.

I had originally thought that I would sell my 40 C shares when the Covered Calls I had on them expired earlier this month.  I was prepared to take a loss and had actually placed a good-till-cancel order for them at $31.  I did a little more calculating today and, with C trading up, I decided to buy the additional 60 shares to round out the lot and start selling out of the money Covered Calls.  I explored several expiration dates out to Jan14 that would immediately make me in the money.  In the end, I decided to sell the Feb12 $32 strike with the thought that I might be able to continue selling Covered Calls for a few months.  I know that I will be able roll these Calls out and perhaps up if it appears that I sold too low a strike price.

S&P currently has a 12-month target of $35 for C with a 3 star (Hold) rating.  MarketEdge currently has a price opinion of $26.31 with a Neutral rating.  The 21 Yahoo Analysts have a mean 12-month estimate of $40.52 and a mean recommendation of 2.3 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 on it just on the Covered Call premiums.