Today, 9/2011, I sold 1 F Oct11 10 Put for a net deposit of $17.24 in an IRA account.  My basis for these F shares, if put to me, would be about $9.37, plus trading costs.  This transaction represents a simple return of about 1.84% and an annualized return of about 20.94% on my potential basis.  There are currently 32 days to expiration.

This is the second month in a row that I have sold $10 puts on F in this account and as is my habit, I consider this a continuing series and accumulate the option premiums on the series to reduce my potential basis.  I don’t know if these Puts will expire worthless or not but if assigned to me they will reduce my basis on my total F holdings in this account.  I already own 100 shares in this account with a basis of $15.76 and waiting to write new Covered Calls on them.

The 15 Yahoo! Analysts have a 1 year mean price target of $18.03, down from $19.57 last month, with a recommendation of 2.0, up from 2.1, where 1.0 is a Strong Buy and 5.0 is a Strong Sell.  S&P has a 12 month price target of $17.00, down from $18.00 last month, with a continuing Buy recommendation.  MarketEdge has a price opinion of $10.62, down from $14.01, but they have raised their recommendation to a Neutral from an Avoid recommendation. 

F does not currently pay a dividend but I believe I have heard comments that they may begin to pay them again late in 2011 or in 2012.  As such, F does not meet my general investment guidelines.  However, the return on the option premiums will make up for the dividends for now.

Today, 8/25/11, I sold 3 BAC Sep 2, 2011 $8 Puts for a net deposit of $92.73 in taxable account.  My basis for these BAC shares would be about $7.75 if Put to me.  This transaction represents a simple return of about 3.99% and an annualized return of about 181.91% with 8 days to expiration.

This sale is for the weekly options which is why they expire in 8 days.  I am taking a small risk of assignment here but with the news this morning that Warren Buffet has invested $5 billion dollars in BAC and his positive comments about the company I think this is a good calculated risk.  Although, the stock is falling off a little as I write this to $8.08.  If assigned I will probably sell the shares because I will be using margin to buy them unless I decided to move some additional funds into this account.

S&P currently has a 12 month target of $9.00 for BAC with a 3 star (Hold) rating.  MarketEdge has a price opinion to $7.19 has an Avoid rating.  The  25 Yahoo analysts have a 12 month price target of 13.60 with a recommendation of 2.3 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.  Of course, I expect that all of these price targets may be revisited and increased in the next few days.

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.

Today, 8/22/11, I sold 1 ZQK Feb11 3 Put for a net deposit of $34.24 in my taxable account.  My basis for these ZQK shares, if Put to me, would be about 2.66.  This transaction represents a simple return of about 12.87% and an annualized return of about 25.66% on my basis.

I don’t have much to say about ZQK.  I have been disappointed with it and will exit it at some point and probably never own it again.  A big reason for that is that ZQK does not pay a dividend and as you know by now I have a strong bias toward dividend paying stocks.  The other reason is that generally the options don’t yield very much, at least not at this time.

After all that, I decided to go ahead and sell this Put on ZQK.  I already own 400 shares in this account with a basis of $9.26.   I have a little cash not being used in this account and decided that I could afford to average down on ZQK if these shares get assigned to me.

The 8 Yahoo analysts have a 12 month target is $5.38 with a range of $6 to $6.  The mean recommendation is slightly biased toward a sell at 2.6 where a 1.0 is a Strong Buy and 5.0 is a Strong Sell.  The Stochastic and Williams %R indicators indicate that ZQK is oversold.  I feel relatively okay with this Put but realize that there is a good possibility that I will own 100 additional shares in February.