Today, 5/24/11 I sold 2 ETFC Oct11 17 Covered Call for a net deposit of $98.48 in an IRA account.  My basis for these ETFC shares is now 85.53.  This transaction represents a simple return of about .57% and an annualized return of about 1.38% on my prior basis.  Not a great return by any means but it felt better than just outright selling the stock at this time.  Another way to look at this is that this transaction represents a simple return of about 3.27% and an annualized return of about 7.90% on the current value of my ETFC shares.  In other words, I would need to have a return that high or higher before it would make sense to sell ETFC and move the money elsewhere.  The alternative investment analysis is always worth considering before just dumping a stock and moving on…at least in my opinion.

I selected the Oct11 expiration month because it returned the greatest annualized return at the $17 strike price.  I considered some further out expirations at slightly higher strikes but in the end decided to go for the shorter term and higher annualized premiums.

ETFC did a reverse 1:10 stock split in June 2010, which is the reason that my basis is so high per share.  As a result of the split I went from owning 800 shares to 80 shares of ETFC.  I pondered just outright selling the remaining 80 shares for awhile.  However, with all of the apparently good news on ETFC at the time, I decided to purchase an additional 20 shares in July 2010 to bring my holdings in this account to 100 so that I can continue to sell Covered Calls.  The new shares were purchased at a net cost of $15 per share.  I then added 100 shares at 16.20 as the result of a Put assignment last week which reduced my average basis considerably. So as along as I can sell Covered Calls above the 16 strike price I will probably continue to do so.

Thomson Reuters continues a Neutral rating on ETFC as of 5/20/11.  S&P continues it 12 month price target of $19.00 and a Buy rating as of 5/21/11.  Market Edge Second Opinion price opinion is now 16.30, up from a previous 15.73 and now has a Long opinion up from its previous Avoid rating.  The Yahoo! Analysts currently have a 12 month price target of 17.64, up from a previous 17.30, and a 2.5 rating where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

Today, 5/4/11 I sold 1 ETFC May11 16 Put for a net deposit of $31.24 in an IRA account.  My basis for these ETFC shares would be 15.69 plus trading costs.  This transaction represents a simple return of about 1.94% and an annualized return of about 41.59% with 17 days left to expiration.

I currently have 1 ETFC May11 16 Covered Call in this account with a basis of 156.15 as a result of a 10:1 reverse split back in June 2010.  My thinking here is that if ETFC looks like it will close above 16 I will roll the Covered Call out and the Put will expire worthless.  If ETFC closes below 16 I will be assigned the Put and own an additional 100 shares which I can use to average down my basis on owned shares and sell new Covered Calls on the 200 shares.

At one point after the 10:1 reverse split I had considered just selling the 80 shares I then owned.  I decided then though to buy to 20 shares to make a round lot and sell Covered Calls one them.  At ETFC continues to generally increase in price I have regained some confidence in it and will probably work with it until such time as I can exit it at a profit.  That may be some time though.

Thomson Reuters continues its rating of Neutral rating on ETFC as of 5/3/11.  S&P continues its 12 month price target of $19.00 and its Buy rating as of 4/30/11.  Market Edge Second Opinion also continues its price opinion of 15.73 and its Avoid rating.  The Yahoo! Analysts currently have a 12 month price target of 17.51 up from 17.30 and a 2.6 rating down from its previous 2.5 rating where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

Today, 4/18/11 I sold 1 ETFC May11 16 Covered Call for a net deposit of $31.24 in an IRA account.  My basis for these ETFC shares is now 156.15.

Thomson Reuters has a Neutral rating on ETFC as of 4/15/11, up from an Under Perform back on 9/20/10 when I last looked.  S&P has raised it 12 month price target to $19.00 and currently has a Buy rating as of 4/16/11, up from a previous target of 16.00 and a Hold rating.  Market Edge Second Opinion price opinion is now 15.73, up from a previous 14.13 but now has an Avoid rating.  The Yahoo! Analysts currently have a 12 month price target of 17.30 and a 2.5 rating where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

ETFC did a reverse 1:10 stock split in June 2010, which is the reason that my basis is so high per share.  As a result of the split I went from owning 800 shares to 80 shares of ETFC.  I pondered just outright selling the remaining 80 shares for awhile.  However, with all of the apparently good news on ETFC at the time, I decided to purchase an additional 20 shares in July 2010 to bring my holdings in this account to 100 so that I can continue to sell Covered Calls.  The new shares were purchased at a net cost of $15 per share so as along as I can sell Covered Calls above the 15 strike price I will probably continue to do so.

I selected the May11 expiration month because it returned the greatest annualized return at the $16 strike price.  I considered some further out expirations at slightly higher strikes but in the end decided to go for the shorter term and higher annualized premiums.

This transaction represents a simple return of about .20% and an annualized return of about 2.21% on my basis.  Not a great return by any means but it felt better than just outright selling the stock at this time.  Another way to look at this is that this transaction represents a simple return of about 2% and an annualized return of about 22.11% on the current value of my ETFC shares.  In other words, I would need to have a return that high or higher before it would make sense to sell ETFC and move the money elsewhere.  The alternative investment analysis is always worth considering before just dumping a stock and moving on…at least in my opinion.