Today, 11/21/11, I sold 8 AA Dec11 $10.00 Covered Calls for a net option premium deposit of $169.91 in an IRA account.  My average basis for these AA shares is now 21.49, excluding dividends received.  This transaction represents a simple return of about .98% and an annualized return of about 14.29% on my prior basis, if held to maturity.

Just like last month I sold the near month Calls at this strike price because I did not want to go too far out and still wanted to get a reasonable return.  I don’t that AA will get to $10 in December but if it does, I should have room to roll these options out and probably up for another net credit to my account.  Choosing the $10 strike is a bit of a gamble with AA currently trading at $9.28 as I write this.  You may remember that I made a similar comment when I sold the Nov11 $11 Calls. 

The 14 Yahoo! Analysts have a mean 12-month price target of $13.27, up from $11.45 last month, with a mean recommendation this week of 2.4, down from 2.3 last week, where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

Last month I wrote about the talking heads saying that there is an increased worldwide demand for aluminum and aluminum products that is helping to drive up AA’s price.  I am not hearing that now but it may be because there is so much commentary about the European financial situation and how that may spill over into theU.S.economy.  Other minor distractions include the growingU.S.debt and the electioneering for next year’s presidential race. 

AA is another of those companies that reduced it dividend.  Back in February 2009 it paid 17 cents per share and has since reduced that dividend to 3 cents per share, including for the current quarter.  I look forward to the day when the dividend begins to recover.  In the meantime, I expect that I will continue to hold AA and collect the dividends such as they are and collect option premiums.  I am tempted to buy some additional AA shares at this price but have decided to delay that until at least next month.

Today, 10/24/11, I sold 8 AA Nov11 $11.00 Covered Calls for a net option premium deposit of $167.94 in an IRA account.  My average basis for these AA shares is now 21.70, excluding dividends received.  This transaction represents a simple return of about .96% and an annualized return of about 5.83% on my prior basis, if held to maturity.

Just like last month I sold the near month Calls at this strike price because I did not want to go too far out and still wanted to get a reasonable return.  I don’t know if AA will get to $11 in November but if it does I should have room to roll these options out and probably up for another net credit to my account.  Choosing the $11 strike is a bit of a gamble with AA currently trading at $10.38 as I write this.  Also,  AA goes ex-dividend on November 2nd which might cause a little additional upward pressure on the stock.  If AA is above $11 by the ex-dividend date I will roll it out to make sure I am not called away just for the dividend, as little as it is.

The 14 Yahoo! Analysts have a mean 12 month price target of $11.45, down from $17.94 last month, with a mean recommendation this week of 2.3, up from 2.4 last week, where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

I continue to hear the talking heads say that there is an increased world wide demand for aluminum and aluminum products which is helping to drive up AA’s price.  In addition, I see that AA has been making some acquisitions, one of which is for an aerospace fastener unit from TransDigm.  This last acquisition got Jim Cramer excited at the time.  I was driving so did not hear all of his comments but believe he thought this positioned AA very well to take advantage of the 7 year aircraft replacement cycle that Cramer has been talking about for something like a year now. 

AA is another of those companies that reduced it dividend.  Back in February 2009 it paid 17 cents per share and has since reduced that dividend to 3 cents per share, including for the current quarter.  I look forward to the day when the dividend begins to recover.  In the meantime, I expect that I will continue to hold AA and collect the dividends such as they are and collect option premiums.  I do not currently plan to acquire any additional shares of AA even though the reduced price would help me to average down my average holding price.

Today, 9/20/11, sold 8 AA Oct11 $13.00 Covered Calls for a net option premium deposit of $119.94 in an IRA account.  My average basis for these AA shares is now 21.91, excluding dividends received.  This transaction represents a simple return of about .68% and an annualized return of about 7.75% on my prior basis, if held to maturity.

Just like last month I sold the near month Calls at this strike price because I did not want to go too far out and still wanted to get a reasonable return.  I don’t know if AA will get to $13 in October but if it does I should have room to roll these options out and probably up for another net credit to my account.

The 11 Yahoo! Analysts have a mean 12 month price target of $17.94, down from $19.44 last month, with a mean recommendation this week of 2.4, up from 2.5 last week, where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

If I can believe the talking heads there is an increased world wide demand for aluminum and aluminum products which is what is driving up AA’s price.  In addition, I see that AA has been making some acquisitions, one of which is for an aerospace fastener unit from TransDigm.  This last trade got Jim Cramer excited at the time.  I was driving so did not hear all of his comments but believe he thought this positioned AA very well to take advantage of the new 7 year aircraft replacement cycle that Cramer has been talking about for something like a year now. 

AA is another of those companies that reduced it dividend.  Back in February 2009 it paid 17 cents per share and has since reduced that dividend to 3 cents per share, including for the current quarter.  I look forward to the day when the dividend begins to recover.  In the meantime, I expect that I will continue to hold AA and collect the dividends such as they are and collect option premiums.