Today, 8/25/10, I sold 7 BAC Oct10 14 Covered Calls for a net deposit of $131.66 in an IRA account.  My basis for these BAC shares is now 20.34, excluding dividends received.

As of 6/19/10, S&P currently has a 12 month target of $22 for BAC, down from an earlier target of $26, with a 5 star (its highest) rating.  MarketEdge has a price opinion of 16.18 with an avoid rating.  The stock closed at $12.66 today.

I was a little hesitant about selling the 14 strike price but with BAC now in the 12’s and the market in general and financials in particular trending down or at best in a range, I decided to go ahead and sell the 14 strike.  If BAC moves up to the 14 level I will be able to roll these Calls out and probably up before they expire.

BAC currently pays a paltry .01 quarterly dividend.  It has paid a .64 quarterly dividend as recently as September 2008.  I believe that BAC will eventually raise its dividend again.  I don’t know if it will be back to the .64 level but certainly it should be well above what it is now.  I continue to believe that BAC will be a strong winner for me one day.

Many of the stocks that I own and write Covered Calls upon also pay dividends.  Dividends occur on a regular basis and add significantly to my annual investment income.  Year to date I have received a total of $3,305.23 in dividends in my various accounts for 2010.  My year to date (through June) average monthly dividends received is currently $550.87.  These dividends represent 24.99% of my monthly investment cash flow and 1.82% return on my current basis value.

During June, I received notice of the following dividends paid in various accounts for a total of $367.04:

Please notice that PGF is an ETF and pays dividends monthly.  The annualized dividend yield for PGF is based upon the simple and false assumption that it will pay the same dividend each month for the next 12 months.  The actual annualized dividend yield may be more or less than illustrated here.

I use my basis per share to determine the simple and annualized percentage return because I feel that it gives me a better representation of the value of the dividends as they relate to my portfolio.  My basis may be above or below the market price which causes my return to be lower or higher than published yields for a stock.  I calculate my basis per share as my acquisition price less any option premiums received on those shares.  I do not use dividends to reduce my basis.

Yesterday, 6/21/10, I sold 7 BAC Aug10 17 Covered Calls for a net deposit of $299.65 in an IRA account.  My basis for these BAC shares is now 20.53.

As of 6/19/10, S&P continues to have 12 month target of $26 for BAC.  They had a target of only $22 in early April.  The stock is trading at about $15.80 as I write this.

Just as I was in May, I was a little hesitant about selling the 17 strike price but with BAC still in the 15’s and the market in general and financials in particular trending down or at best in a range, I decided to go ahead and sell the 17 strike.  I didn’t want to sell July Calls because of the vacation I mentioned in an earlier post and did not feel comfortable going out beyond August.  If BAC moves up to the 17 level I will be able to roll these Calls out and probably up before the August expiration.

BAC currently pays a paltry .01 quarterly dividend.  It has paid a .64 quarterly dividend as recently as September 2008.  I believe that BAC will eventually raise its dividend again.  I don’t know if it will be back to the .64 level but certainly it should be well above what it is now.  I continue to believe that BAC will be a strong winner for me one day.