Stocks and Options » BAC

Bank of America (BAC) – Sold Aug12 Covered Call

Bill — Mon, 21 May 2012 20:50:23 +0000

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.

Bank of America (BAC) – Rolled Down Jul12 Call

Bill — Tue, 08 May 2012 18:39:51 +0000

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.

Bank of America (BAC) – Sold Jul12 Calls

Bill — Tue, 24 Apr 2012 18:42:59 +0000

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.

Dividends Received, F, WFC, BA, MSFT, BALT, VLO, WY, TIE, DCIX, BAC, NYX, IR, BP, FTR, PGF, 1QTR12

Bill — Mon, 02 Apr 2012 17:21:28 +0000

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 $2,785.01 in dividends in my various accounts for 2012. My year to date average monthly dividends received is currently $928.34. The year-to-date dividends currently represent about 30.84% of my average monthly investment cash flow and about 2.49% return on my current basis value.

My YTD dividends are up by $140.42 on a monthly average from last year. That represents a 17.82% increase to date year over year. I attribute the increased dividends to a few companies raising their dividends and to my purchasing additional dividend paying stocks. During February, I received notice of the following dividends paid in various accounts for a total of $1,006.79.

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.

The DCIX shares are ones I received as a split off from Diana Shipping (DSX). I had thought about just selling them but there are so few and the trading cost would chew up so much relative to what I would receive that I decided to keep them, at least for now, and collect the little dividends that they throw off.

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.

Bank of America (BAC) – Sold Apr12 Calls

Bill — Wed, 25 Jan 2012 18:26:16 +0000

On Monday, 1/23/12, I sold 9 BAC Apr12 $9.00 Covered Calls for a net deposit of $93.18 in an IRA account. My basis for these BAC shares is now $15.87, excluding dividends received. This transaction represents a simple return of about .82% and an annualized return of about 3.34% on my prior basis.

S&P currently has a 12-month target of $8 for BAC, with a 3 star (Hold) rating. MarketEdge currently has a price opinion to $6.61 with a Long rating. The 24 Yahoo Analysts have a mean 12-month estimate of 2.5 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 $7.50 that just expired. I decided to sell the $9 strike after watching BAC increase in price since mid December. I would have liked to sell a higher strike but did not want to go too far out. If BAC moves up to the $9 level I should be able to roll these Calls out and probably up before they expire.