Today, 6/5/12, I BTC 3 HRB Jul12 $15 and STO 3 HRB Oct12 $15 Covered Calls for a net deposit of $146.46 in an IRA account.  This transaction represents a simple return of about 4.83% and an annualized return of about 12.88% on my prior basis, if held to expiration.  My basis for these HRB shares is now $9.61, excluding dividends received.

HRB is ex-dividend in a couple of days.  With the current price above my strike price, I felt like somebody might want to call the stock away to collect the dividend.  They still may of course but I feel a little safer with the October expiration that I did with the July expiration date.

I considered rolling out to the January 2013 $16 strike but instead opted for the nearer term $15 strike to capture a larger option premium.  In addition, HRB tends to pull back in the July to October period leaving open the possibility that the October Call will expire worthless.  In the event that I am still called away this week I think I will sell the July $15 Put which sells for .70 as of this writing.  I will miss the dividend but make up for it with the option premiums.

Speaking of the dividend, HRB is paying .20 per quarter, which is about a 5.17% yield at its current price.  Even better, the yield on my prior basis was about 7.40% at the last payout in April.

S&P has a 12-month price target of $14.00 with a Sell recommendation.  MarketEdge has a price opinion of $14.96 and an Avoid recommendation.  Right now, MarketEdge has a slightly better track record predicting HRB movements than S&P.  The other analysts that I can see on E*Trade all have a Sell recommendation for HRB.  The 5 Yahoo Analysts have a 12-month price target of $19.30 and a recommendation of 2.0 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

I wrote in December 2010 that I did not think of HRB as a core holding, at least not at that time.  I don’t know if I would recommend it as a core hold to anybody but I continue to be more positive on it, which is the reason that I continue to roll out the Calls.