NVDA has been moving nicely lately.  So nice, in fact, that it has overrun my prior strike price for May. I am still underwater on NVDA and prefer it not be called away at this time.  On top of that, it goes ex-dividend next week on 5/21/13. I would prefer to continue to collect the dividend. 

So, what is driving the price up?  There is some expectation that NVDA growth will accelerate in the second half of this year.  Earlier this month NVDA reported its fiscal first quarter earning rose 29% on stronger revenue and margins.  Today the company reported an accelerated deal to repurchase $750 million of its stock from Goldman Sachs.  Apparently, this is part of the NVDA plan to return $1 billion to shareholders in the current fiscal year.

At one time, I thought I would eventually let NVDA be called away.  I even began to think of it as dead money.  Then they started to pay a dividend.  I am still underwater on the shares that I own but am more optimistic than I once was.  I even considered buying additional shares a couple of months ago to average down my holdings.  In the end, I sold Puts that expired worthless in April.  I sold Puts again for May and expect them to expire worthless this Friday.

NVDA now pays a .075 quarterly dividend for a yield of about 2.07% at the current price.  Okay dividends but add in the option premium and NVDA becomes more attractive.

S&P currently has a 12-month target of $14 for NVDA with a hold recommendation.  MarketEdge has a price opinion of $13.00 a Long recommendation.  The 23 Yahoo! Finance analysts have a mean 12-month price target of $14.27 and a recommendation of 2.6 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

My $44 weekly Puts were assigned to me last Friday.  Now I start to sell Covered Calls on my new shares.

I wrote last week that I might have been a little aggressive selling the $44 Puts.  BP went ex-dividend last Wednesday so I am not too surprised that it would take a small hit, at least as much as the .54 dividend.  BP is trading at $42.97 as I write this.  I suspect that part of the decline has to do with the general unease in the market place, but maybe not.  I see that other integrated oil and gas companies are up while others are down.

I originally thought to sell Covered Calls on these shares above my assigned price.  However, I would have had to gone out to at least June 7 to even get a $44.40 strike with any premium at all.  I decided to go ahead and sell the $44 strike a week earlier.  I will only net about $108 if called away but a profit is a profit.  I will watch BP and probably roll the Calls out and maybe up if the $44 strike appears in jeopardy as expiration approaches.

I already own 500 BP shares in this IRA account and would like to own more.  I also like that weekly options are available.  I think that BP is finally getting out from under theGulf of Mexicodisaster.  Apparently they are doing more drilling in the Gulf than before.

BP pays a good dividend, currently .54, which is about a 4.88% yield on its current price.  BP paid a dividend of .84 prior to the oil spill.  The dividend was cut in half to .42 after the spill and has been increased twice since then to .48 and the current .54.

S&P continues a 12-month price target of $56 with a Hold recommendation.  MarketEdge has a price opinion of $43.96 and a Long recommendation.  The 10 Yahoo! Analysts continue a 12-month price target of $51.42 and a recommendation of 2.3 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

This is the latest in a series of selling Puts on NLY going back to early 2011 in this account.  I have yet to be assigned NLY shares in this account but did roll the Puts out twice in the series.  I continue to reduce my potential basis as long as the series lasts through assignment of the shares and their eventual assignment away from me.  I could treat each Put sale as a separate event and not accumulate the option premium against the strike price but I think this method helps me understand the cumulative return and cash flow on the capital employed.

The 52-week low for NLY is $13.72 on 11/15/12 with a high of $17.75 on 9/12/12.  I expect my current Puts will expire worthless in October.  If not, I will probably take the assignment rather than attempt to roll the Puts out even though I will probably be buying the shares on margin.  I will then begin to sell Covered Calls and collect the dividends.

I like NLY and its nice dividend.  NLY currently pays out .45 per quarter in dividends for a yield of about 11.87%.  The dividend is down from a previous .50 last October.

S&P has a 12-month price target of $15 with a Hold recommendation.  MarketEdge Second Opinion has a price opinion of $15.12 with an Avoid recommendation.  The 17 Yahoo! Analysts have a 12-month price target of $15.38 and a 2.7 recommendation where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

I BTC 3 Jan14 $21 contracts and STO 3 Jan15 $25 contracts for a net deposit of $47.38.  My basis for these shares is now $31.29, excluding dividends received.  This transaction represents a simple return of about .44% and an annualized return of about .26% on my prior basis, if held to maturity. The increased strike price yields a simple return of about 13.16% and annualized return of about 7.75%.  There are 620 days to expiration.

I BTC 4 Jan14 $21 contracts and STO 4 Jan15 $25 contracts for a net deposit of $63.17.  My basis for these shares is now $29.46, excluding dividends received.  This transaction represents a simple return of about .49% and an annualized return of about .29% on my prior basis, if held to maturity. The increased strike price yields a simple return of about 13.99% and annualized return of about 8.24%.  There are 620 days to expiration.

I BTC 5 Jan14 $21 contracts and STO 5 Jan15 $25 contracts for a net deposit of $78.97.  My basis for these shares is now $20.59, excluding dividends received.  This transaction represents a simple return of about .72% and an annualized return of about .42% on my prior basis, if held to maturity. The increased strike price yields a simple return of about 19.99% and annualized return of about 11.77%.  There are 620 days to expiration.

I BTC 1 Jun13 $21 contracts and STO 1 Jun14 $25 contracts for a net deposit of $15.47 in another IRA Account.  My basis for these shares is now $33.43, excluding dividends received.  This transaction represents a simple return of about .46% and an annualized return of about .66% on my prior basis, if held to maturity. The increased strike price yields a simple return of about 12.37% and annualized return of about 17.64%.  There are 256 days to expiration.

Notice that the return percentages are qualified with the phrase “if held to maturity”.  I should probably include that phrase with every trade because I find that I roll almost half of my option contracts out or in prior to the original expiration.  The result is that the annual percentage returns on the original trade are actually higher that initially reported.

I have rolled these Covered Calls up and down, in and out four times now in the past month.  Each time I gather a little more option premium and thereby reduce my basis.  This time I had to go all the way out to January 2015 for most of these shares to get ahead of the rapid increase in the CLF share price for a net profit trade.

I am not sure why CLF has moved up so much lately.  It closed at $19.17 last Friday and is up $1.46 as I write this to $22.79 today.  CLF is nothing if not volatile.  I can only surmise that CLF is benefitting from the general rise in the markets and possibly from the recent announcement of the .15 quarterly dividends yesterday.  The continuation of a dividend after the sharp reduction last quarter might be enough at least to provide some psychological support.

CLF pays a decent dividend relative to its current price at .15 per share, which is about a 2.63% yield.  However, that dividend is down from an earlier .625 per share.  I don’t see any reason for the dividend to recover materially any time soon.  I do believe that, at least, the stock price will improve at some point (I just did not expect it to be so soon and so much).  In the meantime, I will roll the Calls up and down, in and out, to gather some cash flow and reduce my basis.

CLF is now far into the overbought range as indicated by the Williams %R and moving into it on the Slow Stochastic chart.  The 52-week low is $16.73, which it hit on 4/22/13.

S&P continues a 12-month price target of $30 and a Hold recommendation.  MarketEdge has a price opinion of $20.17 and a Neutral recommendation.  The 15 Yahoo Analysts have a mean 12-month price target of $24.20 and a recommendation of 3.1 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

I rolled 1 May13 $30 contract to a Jan15 $38 contract in my Taxable Account for a net deposit of $76.47.  These transactions represent a simple return of about 2.19% and an annualized return of about 1.29% on my prior basis.  With the increased strike price, the simple return is about 25.08% and the annualized return is about 14.76% on my prior basis.  Dividends received are excluded from both return calculations.

I rolled 2 May13 $30 contract to Jan14 $34 contracts in an IRA Account for a net deposit of $48.03.  These transactions represent a simple return of about .79% and an annualized return of about 1.12% on my prior basis.  With the increased strike price, the simple return is about 13.66% and the annualized return is about 19.48% on my prior basis.  Dividends received are excluded from both return calculations.

I originally purchased these shares for the purpose of selling close to the money weekly Calls so they could be called away for a slight profit.  Somewhere along the way, my plan broke down.    So…now, I find myself selling much farther out so the shares are not called away below my basis.  Now, if I am called away I will make money on all of these shares above my original purchase price.

FCX pays a decent dividend of .3125 per quarter for a yield of about 3.96 at the current price.  I normally find that I can sell Puts and Calls on FCX to add to the dividend on a fairly regular basis.  Except that is not working for me right now.  If FCX falls back below $30 I may be able to roll these contracts in and down for some additional cash flow but I am not holding my breath on that with the market charging up as it is.

S&P has a 12-month price target of $23 and a Sell recommendation.  MarketEdge has a price opinion of $31.13 and has a Neutral opinion on FCX.  The 14 Yahoo Analysts currently have a 12-month price target of $37.14 and a recommendation of 2.3 on a scale where 1.0 is a Strong Buy and 5.0 is a Strong Sell.