Stocks and Options » BAC

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.

Dividends Received, WY, BA, MSFT, DSIX, VLO, BP, TIE, BAC, IR, NYX, FTR, PGF, 4QTR11

Bill — Sun, 01 Jan 2012 21:32:52 +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 $9.454.95 in dividends in my various accounts for 2011. My year to date average monthly dividends received is currently $787.91. The year-to-date dividends currently represent about 28.59% of my average monthly investment cash flow and about 2.14% return on my current basis value.

My YTD dividends are up by $183.64 on a monthly average from last year. That represents a 30.39% 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 October, I received notice of the following dividends paid in various accounts for a total of $832.89.

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 May12 Call

Bill — Mon, 19 Dec 2011 19:31:37 +0000

Today, 12/19/11, I STO 3 BAC May12 8 Covered Calls for a net deposit of $19.73 in my taxable account. My basis for these BAC shares is now $7.11. This transaction represents a simple return of about .92% and an annualized return of about 2.21% with 151 days to expiration.

This month I had to go all the way out to May12 to be able to sell an $8 strike for any profit. I would have preferred to sell something a little closer in but it was not possible today. I can let BAC be called away in May 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 May. There is an awful lot of negative commentary working against BAC, which is tending to hold it down.

S&P continues a 12-month target of $8 with a 3 star (Neutral) rating, down from a 4 star (Buy) last month, for BAC. MarketEdge has a price opinion of $5.72, down from $6.46 last month and continues its Neutral rating. The 25 Yahoo Analysts currently have a 12-month price target of $9.74, down from $10.12 last week, and a recommendation of 2.4 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

Bank of America (BAC) – Sold Dec11 Call

Bill — Mon, 24 Oct 2011 18:55:02 +0000

Today, 10/24/11, I STO 3 BAC Dec11 8 Covered Calls for a net deposit of $32.73 in my taxable account. My basis for these BAC shares is now $7.17. This transaction represents a simple return of about 1.50% and an annualized return of about 6.21% with 88 days to expiration.

Just as last month, I can let BAC be called away in December 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 December. 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 $8, down from $10 last month, and a 4 star (Buy) rating for BAC. MarketEdge has a price opinion of $6.46, down from $7.19 last month and has increased it rating to Neutral from an earlier Avoid. The 25 Yahoo Analysts currently have a 12 month price target of $10.12, down from $12.20 last week, and a recommendation of 2.4 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

Bank of America (BAC) – Rolled In and Down May12 Call

Bill — Mon, 03 Oct 2011 23:39:34 +0000

Today, 10/3/11, I BTC 9 BAC May12 $10.00 Covered Calls and STO 9 Jan12 $7.50 Covered Calls for a net deposit of $95.37 in an IRA account. My basis for these BAC shares is now 15.97, excluding dividends received. This transaction represents a simple return of about 1.28% and an annualized return of about 3.80% 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 such a low strike price but like that I was able to bring the expiration in four months.

S&P continues a 12 month target of $10 for BAC with a 4 star (Buy) rating. MarketEdge has decreased its price opinion to $6.31 from an earlier $10.70 and now has an Avoid rating. The 25 Yahoo Analysts have a 12 month price target of $10.90 with a 2.3 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 buy and close these option contracts that keeps me interested in it at this time.