Today, 8/22/11, I sold 8 S Jan12 5 Covered Calls for a net deposit of $103.91 in an IRA account.  My basis for these S shares is now 9.57.  This transaction represent a simple return of about 1.34% and an annualized return of about 3.15%, if held to expiration.

The stock is down 8 cents at this writing with about an hour before the closing bell to $3.34.  Just as I did when I sold the prior Aug11 Calls, I decided to go ahead and sell these Covered Calls at $5 and wait and see what happens.  I may need to try rolling them out before Jan11 expiration.

S paid a small dividend (2.5 cents) up until December 2007.  It has not paid a dividend since then and I am not sure if or when they will resume.  Today I do not consider S part of my core holdings, mostly because it no longer pays a dividend,  but I am still content to hold it and collect option premiums to reduce my basis and one day expect to exit S at a profit.  If Sprint does resume dividends one day, and before I sell it, I will re-evaluate whether or not to continue holding it.  I doubt that I will repurchase it if I no longer hold it at that time.

The Yahoo! Analysts currently have a 12 month price target of $5.75, up from $5.28 when I last wrote in January 2011 and a 2.4 recommendation, up from 2.5 where 1.0 is a Strong Buy and 5.0 is a Strong Sale.  So, I guess the consensus is slightly toward a Buy.

Today, 1/24/11, I sold 8 S Aug11 5 Covered Calls for a net deposit of $223.88 in an IRA account.  My basis for these S shares is now 9.70.

The Yahoo! Analysts currently have a 12 month price target of $5.28 and a 2.5 recommendation where 1.0 is a Strong Buy and 5.0 is a Strong Sale.  So, I guess the consensus is a Hold.  

The stock is up 6 cents at this writing just before the closing bell to $4.36.  Just as I did when I sold the Jan11 Calls, I decided to go ahead and sell these Covered Calls at $5 and wait and see what happens.  I may need to try rolling them out before Aug11 expiration.

I am also considering selling some Aug11 Puts on S, probably at the $4 strike price.  The reason is for the additional cash flow of course but also, if they are assigned to me they would further reduce my basis allowing me greater latitude and comfort when I sell new Covered Calls on the entire lot.  The Aug11 4 Puts are currently selling at 34 cents.  One hesitation is that I don’t normally like to sell Puts that far out.

S paid a small dividend (2.5 cents) up until December 2007.  It has not paid a dividend since then and I am not sure if or when they will resume.  Today I do not consider S part of my core holdings, mostly because it no longer pays a dividend, I am still content to hold it and collect option premiums to reduce my basis and one day expect to exit S at a profit.  I Sprint does resume dividends one day, and before I sell it, I will re-evaluate whether or not to continue holding it.  I doubt that I will repurchase it if I no longer hold it at that time.

The holidays and visitors have managed to consume my time and now I am an entire week behind documenting my trades.  I have four option trades to document and one assignment.  Here is the third option trade:

On 11/22/10, I sold 3 S Jan11 3.50 Puts for a net deposit of $23.71 in an IRA account.  My basis for these S shares if put to me would be 3.42.  These transactions yield a simple return on my potential assigned price of about 2.24% and an annualized return of about 13.38%.

I already own 800 shares of Sprint with Jan11 Covered Calls at the $5 strike price on them.  My basis for the existing shares is 9.98.  I really don’t want them called away while I am so far under water so I guess I am hoping that I am assigned the Puts that I just sold.  Doing so will further reduce my average basis.  Perhaps I will be able to actually sell Covered Calls above my basis one day and get these shares called away.

S&P currently has a 12 month price target of $6.50 for Sprint with a Buy recommendation but a poor (0% accuracy) rating predicting Sprint’s price movement.  MarketEdge has a price opinion of $4.03 with an Avoid recommendation and a Fair (28% accuracy) rating prediction Sprint’s price movement.

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.