Yesterday, 1/23/12, I sold 10 WFC Jan 27, 2012 $31 Puts for a net deposit of $554.41 in 5 IRA Accounts and in my Taxable Account.  My basis for these FCX varies from $30.39 to $30.54.  These transactions represents simple returns of about 1.51% to about 2.01% and annualized returns of about 138.08% to about 183.19% on my potential basis with 4 days to expiration.

FCX rose above my comfort range for selling weekly options.  At this time, I prefer FCX to be no higher than $40 and a few cents for the weekly trades.  So, casting about for another stock for weekly trading, I settled on WFC as the one with which I am most comfortable.  WFC has the added benefit of being lower priced which allows me to trade more contracts.  I considered buying the stock and selling Covered Calls at $31 until I saw that I could sell the $31 Puts and acquire the shares at a lower price if they are assigned to me while earning a larger dollar premium.  At this time, I fully expect that these shares will be assigned to me and that I will be selling Covered Calls at $31 on the shares next week.

S&P has a 12-month price target of $33 with a Buy recommendation.  MarketEdge currently has a price opinion of $26.07 and has a Long recommendation.  The 30 Yahoo Analysts have a 12-month price target of $34.08 and a recommendation of 2.1 on a scale where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

Today 1/19/12, I BTC 3 S Jan12 $3 Puts and STO 3 Aug12 $3 Puts for a net deposit of $38.45 in an IRA account.  My basis for these S shares if put to me would now be about $2.52 plus trading costs.  These transactions yield a simple return on my potential assigned price of about 5.07% and an annualized return of about 8.74%, if held to expiration.

I already own 800 shares of Sprint with Jan12 Covered Calls at the $5 strike price on them.  My basis for the existing shares is $9.57.  At the time I sold the Jan12 Puts I expected that they would expire worthless.  It turns out that I was wrong.    I also thought that an assignment would be beneficial because it would allow me to average down my total holdings to about $7.69.  Upon current evaluation, I see that I am dollars ahead by rolling out these Puts rather that selling Covered Calls on the assigned stock.  As it is, I will need to go out to Jan14 to sell the $5 Call or Jan13 to sell the $4 call for a reasonable premium.  I may need to sit on Sprint for a time to see if it will recover a bit before selling new Calls on my existing shares.

S&P currently has a 12-month price target of $5.00 for Sprint with a Buy recommendation but a poor (0% accuracy) rating predicting Sprint’s price movement.  MarketEdge has a price opinion of $2.77 with a Neutral recommendation and a Fair (40% accuracy) rating prediction Sprint’s price movement.  The 29 Yahoo Analysts have a mean 12-month target of $3.83 with a recommendation of 2.7 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

As you may surmise from my comment above, I don’t really desire to continue owing Sprint but also don’t want to have it called away at a loss.  There are no dividends so, unless I can make a decent return from the option premiums, I expect it will be out of my portfolio one day.

Today, 9/3011, I BTC 1 BP Jan13 $45.00 Put and STO 1 Jan14 45 Put for a net deposit of $218.47 in my taxable account.  My basis for these BP shares, if put to me, would now be 37.27, excluding trading costs.  These transactions represent a simple return of about 5.86% and an annualized return of about 2.51% on my prior basis, if held to expiration, with 851 days to expiration.

I sold the original Puts in this series when the BP well in the Gulf sank.  My original strike price was $50.  My belief was that the price of BP was being punished much more than need be.  Since the original sale I have now rolled out and down a few times, picking up some additional premium each time.  I believe that this options will expire worthless one because I believe that the price of oil will trend upward in the long term.  I actually thought this option would have expired worthless already but I guess the outlook for the world economy had dampened the outlook for oil stocks in general.

I still think my thesis about the BP price is correct but decided to mitigate my risk a little more and capture some additional cash by rolling the Jan13 Puts out now.  I really would not mind owning some additional BP but if Put to me in this account the purchase would be on margin and I am trying to avoid doing that to any great extent.

S&P currently has a 12 month price target of $58 with a Hold recommendation.  MarketEdge has a price opinion of $39.69 and a Neutral recommendation.  The 12 Yahoo! Analysts have a 12 month price target of $53.70 and a recommendation of 2.0 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.