Today 12/19/11, I bought 100 NLY shares for a net cost of $1,640.98 in an IRA account.  My basis for these NLY shares is now $16.41.

I already own 400 NLY shares in this account with Jan12 $19 Covered Calls on them.  Assuming that those Calls expire worthless next month I will combine them with these new shares, which will reduce my basis.  I will then see about selling new Covered Calls on the 500 shares.

I sort of think of NLY as part of my core holding because of its good return (14.13% on my basis when last received on 10/27/11) and for the extra income I can receive from selling Covered Calls.  I must admit though that I bought these new shares for the dividend that I will receive next month.

I should note here that the dividend payout varies from quarter to quarter.  Since I began to track and record my dividend income NLY quarterly dividends have varied from a low of .25 on 4/29/09 and a high of .68 on 7/29/10 and again on 10/28/10.  It has slipped a little each quarter since October 2010 to .57 for the January payout.

As a point of reference, the 20 Yahoo Analysts have a 12 month price target of $17.45 and a recommendation of 2.3 where 1.0 is a Strong Buy and 5.0 is a strong sell.

Today, 11/7/11, I sold 1 FCX November 11, 2011w $41.00 Covered Call for a net deposit of $56.24 in my taxable account.  My basis for these FCX shares is now $39.59.  This transaction represents a simple return of about 1.40% and an annualized return of about 127.73% on my prior basis with 4 days to expiration.  If called away, which is my goal, I will realize a total net profit of about $121.21 for a simple return on this transaction of about 2.94% and an annualized return of about 268.72%.

I have made similar trades on FCX recently, some of which were assigned as desired, while some were not which allowed me to sell new options.  In this case, the Call I sold on these FCX shares expired last week and I am now selling the second weekly covered call against the stock.

I still like selling these weekly Calls and still think that I can gather cash faster than my normal methods.  It is still kind of an experiment for me.  Normally I like to hold FCX, collect the dividends and sell Covered Calls well out of the money.  In this case, I hope to gather option premiums while selling Covered Calls slightly out of the money with the goal of the stock being called away above my basis allowing me to repeat the cycle with the same or another stock.  I have tried this with FCX in other trades and it has not always worked out quite as I thought because FCX retreated from my target strike price and I still own the shares.  On the other hand, FCX is volatile enough that I am still making money selling Covered Calls on it.  I am discovering that I can roll the Calls out and up sometimes or down and in sometimes and make money each roll.  As I said in another post, I am beginning to feel like a trader here, which is not normally my style.

S&P has a 12-month price target of $48 and has a Buy recommendation.  MarketEdge has a lower price opinion of $36.77 and a Neutral opinion.  The 18 Yahoo Analysts currently have a 12-month price target of $51.94, up slightly from $51.29 last week and continue a recommendation of 1.8; on a scale where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

At the risk of repeating myself, I actually like FCX and would like to own more of it.  However, I am using these shares as a trading vehicle in an attempt to generate cash flow more quickly.  Even as I make those comments, I realize that I in fact own more of it. 

Today, 11/3/11, I bought 100 FCX and sold 1 FCX November 11, 2011w $40.00 Covered Call for a net deposit of $136.24 in my taxable account.  My basis for these FCX shares is now $38.92.  This transaction represents a simple return of about 3.38% and about 154.04% annualized on my prior basis with 8 days to expiration.  If called away, which is my goal, I will realize a simple return of about 1.99% and an annualized return of about 90.75% or a net profit of about $80.28.

I have made similar trades on FCX recently, some of which were assigned as desired, while some were not which allowed me to sell new options.  I rather like this type of trading and expect to continue to do it as long as they seem to work.

The reason that I like this trade is that I think I can gather cash faster than my normal methods.  It is still kind of an experiment for me.  Normally I like to hold FCX, collect the dividends and sell Covered Calls well out of the money on it.  In this case, I hope to gather option premiums while selling Covered Calls slightly out of the money with the goal of the stock being called away above my basis allowing me to repeat the cycle with the same or another stock.  I have tried this with FCX in other trades and it has not always worked out quite as I thought because FCX retreated from my target strike price and I still own the shares.  On the other hand, FCX is volatile enough that I am still making money selling Covered Calls on it.  I am discovering that I can roll the Calls out and up sometimes or down and in sometimes and make money each roll.  As I said in another post, I am beginning to feel like a trader here, which is not normally my style.

S&P has a 12-month price target of $48 and has a Buy recommendation.  MarketEdge has a lower price opinion of $36.77 and a Neutral opinion.  The 17 Yahoo Analysts currently have a 12-month price target of $51.29, down from $66.02 last week and a recommendation of 1.8, up from a previous 2.0, on a scale where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

At the risk of repeating myself, I actually like FCX and would like to own more of it.  However, I am using these shares as a trading vehicle in an attempt to generate cash flow more quickly.  Even as I make those comments, I realize that I in fact own more of it.