Yesterday, 8/19/11, I BTC 2 AMD Jan13 10 Covered Calls and STO 2 Jan13 7.50 Covered Calls for a net deposit of $76.97 cents in my taxable account.  My basis for these AMD shares is now 14.88.  This transaction represents a simple return of about 2.52% and an annualized return of about 1.77% on my prior basis.

I took advantage of the falling market and AMD in particular to raise some additional cash in this taxable account.  It has been a bit of a roller coaster ride this month.  Earlier this month I rolled AMD out and up from a Jan12 $9 Call to a Jan13 $10 Call to raise cash because I was anticipating the need to increase my cash position in this account to cover a margin requirement.  I no longer anticipate the cash call but am now more aware of the possibilities of making additional money by adjusting expiration dates and/or strike prices.  I’ve done that in the past but had let the practice fall away as a strategy.  In the case of AMD, I fully expect to be rolling the current Jan13 Calls out and hopefully up if Jan14 LEAPS are posted for it.

Amazingly, S&P continues its 12 month price target of 11.00 and its Hold rating but they have a Poor track record predicting AMD price movement (correct 0% of the time in the past year).  Market Edge Second Opinion continues it price opinion of 7.75 and its rating of Neutral with a fair track record predicting AMD price movement (correct 30% of the time).  The Yahoo! Finance analysts have a 12 month price target of 8.53, down from a previous 8.63, with a recommendation of 2.5 (1.0 = Buy, 5.0 = Sell).

So, after all that, I will let AMD go just as soon as I can get something more than my basis for it.  I probably should let it go now but hope springs eternal and as long as I can continue to sell options on it my return on each transaction will increase as my basis reduces.  Also, I don’t need any more losses right now because I have enough from 2008 to last a few more years.  How’s that for rationalization. 

Today, 8/8/11, I BTC 2 AMD Jan12 9 Covered Calls and STO 2 Jan12 10 Covered Calls for a net deposit of a whopping $56.97 cents in my taxable account.  My basis for these AMD shares is now 15.27.  This transaction represents a simple return of 1.83% and an annualized return of 1.26% on my prior basis.

I made these trades in order to raise some additional cash in this taxable account.  I am anticipating the need to increase my cash position in this account to cover a margin requirement.  Being able to roll the strike up one dollar at a net credit helped me to make the trades.  I would have preferred to have rolled the option in and down but there was not enough money in the options to do that just now.

Amazingly, S&P has a 12 month price target of 11.00, up from my last look when it was 9.00, and continues a Hold rating but they have a Poor track record predicting AMD price movement (correct 0% of the time in the past year).  Market Edge Second Opinion has a price opinion of 7.75, up from a previous 7.34, and reduced there rating to a Neutral from a previous Long rating on the stock with a fair track record predicting AMD price movement (correct 40% of the time).  The Yahoo! Finance analysts have a 12 month price target of 8.63, up from a previous 8.43, with a recommendation of 2.5, up from a previous 3.0, (1.0 = Buy, 5.0 = Sell).

So, after all that, I will let AMD go just as soon as I can get something more than my basis for it.  I probably should let it go now but hope springs eternal and as long as I can continue to sell options on it my return on each transaction will increase as my basis reduces.  Also, I don’t need any more losses right now because I have enough from 2008 to last a few more years.  How’s that for rationalization. 

Today, 7/28/11, I STO 2 Jan12 9 Covered Calls for  a net deposit of $82.48 cents in my taxable account.  My basis for these AMD shares is now 15.56.  This transaction represents a simple return of about 2.58% and an annualized return of about 5.32% on my prior basis.

Even though the stock is down right now I was concerned earlier that I might need to roll the July calls out which would have been a little problematical because of my vacation.   As it turned out I was needlessly concerned.  The current trade is fifth time I’ve increased my strike price since January of 2009.  That is a trend I like.

AMD has been a difficult stock to own.  I does not pay a dividend and I am still underwater on the shares.  A bullish read on AMD can be found here.  A bearish read on AMD can be found here.  My opinion is that I will probably not purchase any more AMD, if for no other reason, because it does not pay a dividend which is one of my general criteria for acquiring new stocks.  I violate that criteria now and then (witness YHOO) and might do so with AMD if I have the extra cash in this account at the same time that I am either rolling out AMD or selling new calls on it.  The purpose of doing so would be to reduce my basis and facilitate having the stock called away at a price over my basis.

S&P currently has a 12 month price target of 11.00, up from a prior 9.00 when I last looked and continues a Hold rating but they have a poor track record predicting AMD price movement (correct 0% of the time in the past year).  Market Edge Second Opinion has a price opinion of 7.75, up slightly from the 7.34  that they developed back in November 2010 and have a Neutral rating, up from an Avoid rating on the stock with a fair track record predicting AMD price movement (correct 44% of the time).  The Yahoo! Finance analysts have a 12 month price target of 8.63.

So, after all that, I will let AMD go just as soon as I can get something more than my basis for it.  I probably should let it go now but hope springs eternal and as long as I can continue to sell options on it my return on each transaction will increase as my basis reduces.  Also, I don’t need any more losses right now because I have enough from 2008 to last a few more years.  How’s that for rationalization.