Today, 2/2/12, BTC 1 C Feb12 $32 Covered Call and sold 1 C Apr12 $34 Covered Call for a net deposit of $34.49 in an IRA account.  My basis for these C shares is now $32.93, excluding dividends received.  This transaction represents a simple return of about 1.03% and an annualized return of about 4.78%, if held to maturity.

At this point, I am glad I did not just sell the 40 shares I owned last month.  I may be being a little greedy here but I am happy to need to roll out and up my Calls on C.  Rather than take a loss last month I am now in a position where I will actually make a capital gain if my C shares are called away.

S&P continues a 12-month target of $35 for C with a 3 star (Hold) rating.  MarketEdge currently has a price opinion of $30.87 and a Long rating, up from $26.31 with a Neutral rating last week.  The 22 Yahoo Analysts have a mean 12-month estimate of $40.77, up slightly from last week, and a mean recommendation of 2.3 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

C resumed dividend payouts in May 2011 at one cent per quarter.  Prior to that, it last paid a ten cent dividend in January 2009.  I am not considering C as a long term core stock but I still stand to make a reasonable profit just on the Covered Call premiums.

Today, 1/31/12, I BTC 8 AA Apr12 10 Covered Calls and STO 8 AA Jan14 12.00 Covered Calls for a net option premium deposit of $475.87 in an IRA account.  My average basis for these AA shares is now 20.44, excluding dividends received.  These transactions represent a simple yield of about 2.83% and an annualized yield of about 1.44% with 718 days to expiration.

I find this trade a little humorous because I did almost exactly the same thing one year ago.  The only real difference was that I then was rolling up from an Apr11 $16 strike to a Jan12 $17.50.  Of course, I rolled out an extra year this time.  Then, in Aug11, I actually rolled in and down to the Aug11, $13 strike and was able to sell monthly options through Dec11.  Maybe I will be able to do something similar again with these shares.

I made this trade today because AA is ex-dividend tomorrow and I was a little in the money on my prior Covered Calls.  I did not to take the chance that somebody would call my shares away because of the recent run up and to capture the dividend, regardless that it is only 3 cents per share.  I would probably have been okay but decided to go ahead and get the additional cash deposited today and increase my potential called deposit by an additional $1600.

AA has been moving up of late.  The 16 Yahoo Analysts have a mean 12-month price target of $11.40 with a mean recommendation this week (and last week) of 2.5 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.  S&P has a12-month price target of $13.00 with a Buy recommendation.  MarketEdge has a price opinion of $10.43 with a Long recommendation.

AA is one of those companies that reduced it dividend.  Back in February 2009 it paid 17 cents per share and has since reduced that dividend to 3 cents per share, including for the current quarter.  I look forward to the day when the dividend begins to recover.  In the meantime, I expect that I will continue to hold AA and collect the dividends such as they are and collect option premiums.

Today, 1/30/12, I sold 10 WFC Feb12 $31 Calls for a net deposit of $60.41 in 5 IRA Accounts and in my Taxable Account.  My new basis for these FCX varies from $30.36 to $30.71.  These transactions represents simple returns of about .10% to about .27% and annualized returns of about 2.11% to about 5.49% on my potential basis with 18 days to expiration.  I will also collect a .12 dividend on these shares as WFC goes ex-dividend in a couple of days on 2/1/12.

I acquired these shares by design by selling last weeks “weekly” Puts at the $31 strike.  However, WFC fell more than I anticipated last week making the Feb 3, 2012 weekly WFC $31 calls too cheap to generate a positive cash flow.  Even the Feb12 $31 Calls just barely created profits for my single lots.  Even so, I sold the Feb12 $31 Calls because my goal with these shares is to be back to cash as quickly as possible with a profit.  I rather expect that the Feb12 Calls will expire worthless and I will then be able to sell new calls, hopefully the weeklies.

S&P continues a 12-month price target of $33 with a Buy recommendation.  MarketEdge continues a price opinion of $26.07 and has a Long recommendation.  The 30 Yahoo Analysts have a 12-month price target of $34.28 and a recommendation of 2.1 on a scale where 1.0 is a Strong Buy and 5.0 is a Strong Sell.