Yesterday, 1/23/12, I sold 2 IR Feb12 $37 Covered Calls for a net deposit of $60.48 in an IRA account.  My basis for these IR shares is now 47.59, excluding dividends received.  In addition to the increase in my strike price by $2 over my prior Calls, these transactions represent a simple return of about .63% and an annualized return of about 8.86% on my prior basis.

I have been rolling IR Covered Calls out since February 2009.  It is refreshing to have them actually expire worthless as they did last week.  It is also refreshing to be able to sell the next month strike for a change.  IR is up more than $1 to $35.69 as I write this.  I hope that I don’t need to roll it out again but will certainly do so if it looks like the shares are in jeopardy.

S&P currently has a 12-month price target of $30 for IR and a Buy rating.  MarketEdge has a price opinion of $30.65 and a Long recommendation.  The 18 Yahoo Analysts have a 12-month price target of $37.94 and a recommendation of 2.3 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

IR has increased it dividend for the second time in the past year and now pays a .16 per quarter dividend, which is about a 1.80% annual yield on the current price, and about 1.34% on my current basis.  That is not stellar.  IR’s dividend was .18 per quarter as recently as May 2009.  Even at .18 IR’s dividend is not great.  Over time, unless called away sooner, my basis will decline as I continue to sell new Covered Calls and the dividend yield on my basis will improve.  The Call option premium will also increase my actual return on my investment in the stock