Today, 5/21/12, I STO 3 BAC Aug12 $8 Covered Calls for a net deposit of $61.73 in my taxable account.  My basis for these BAC shares is now $6.90.  This transaction represents a simple return of about 2.89% and an annualized return of about 1186% with 89 days to expiration.

For a while, it appeared that these BAC shares would be called away last week.  Then, as March ended, the price began to deteriorate.  With only a couple of exceptions the price decline continued through today.

On the bright side, I only had to go out to Aug12 to be able to sell the $8 strike for a reasonable price.  I would have preferred to sell the Jun12 Calls but that was not possible for me today.  I can let BAC be called away in August and be money ahead, which is really my goal here as I am treating BAC as a trade in this account.  However, I am not convinced that BAC will be above $8 in August.  There is an awful lot of negative commentary working against BAC, which is tending to hold it down.

S&P Currently has a 12-month target of $9 with a 3 star (Hold) rating for BAC.  MarketEdge has a price opinion of $7.74 with an Avoid rating.  The 25 Yahoo Analysts currently have a 12-month price target of $9.95 and a recommendation of 2.8 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

Today, 5/8/12, I BTC 9 BAC Jul12 $10.00 Covered Calls and STO 9 Jan12 $9.00 Covered Calls for a net deposit of $77.29 in an IRA account.  My basis for these BAC shares is now $15.66, excluding dividends received.  This transaction represents a simple return of about .55% and an annualized return of about 2.66% if held to expiration.

I took advantage of the market move down over the last few days to try to make a little extra option premium from BAC.  I took a chance by selling at the lower strike price but am confident that I can roll out and up again if necessary.

S&P has a 12-month target of $9 for BAC, down from a recent $10 target, and now has a 3 star (Hold), down from a 4 star (Buy) rating.  MarketEdge now has a price opinion of $7.74 and an Avoid rating.  The 25 Yahoo Analysts have a 12-month price target of $10.03 with a 2.8 recommendation where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

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, or maybe I should say someday in the future.  With that said, BAC has been performing pretty poorly lately and it is only my ability to trade these option contracts that keeps me interested in it at this time.

Today, 4/24/12, I sold 9 BAC Jul12 $10.00 Covered Calls for a net deposit of $118.18 in an IRA account.  My basis for these BAC shares is now $15.75, excluding dividends received.  This transaction represents a simple return of about .78% and an annualized return of about 3.23% on my prior basis.

S&P currently has a 12-month target of $9 for BAC, up from $8 in Jan12, with a 3 star (Hold) rating.  MarketEdge continues a price opinion to $6.61 and a Long rating.  The 25 Yahoo Brokers have a mean 12-month estimate of $10.03 and a recommendation of 2.8 where 1.0 is a Strong Buy and 5.0 is a Strong Sell. 

I increased my strike price this time up from my previous $9 that just expired.  I decided to sell the $10 strike after watching BAC increase in price since mid December and because the analysts have increased their estimates.  I would have liked to sell a higher strike but did not want to go too far out.  If BAC moves up to the $10 level I should 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.