Today, 4/23/12, I sold 2 Jul12 $40.00 Covered Calls for a net income of $80.48.  My basis for these VZ shares is now $34.17, excluding dividends received.  This transaction represents a simple return of about 1.16% and an annualized return of about 4.77%. 

S&P continues a 12-month price target of $37 and a Hold recommendation for VZ.  MarketEdge has a price opinion of $38.23 and an Avoid opinion.  The 29 Yahoo analysts have a 1-year price target of $39.72 and a 2.6 recommendation on a scale where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

I consider VZ to be a part of my core holdings and would like to own more of it but just don’t have the cash available to do so at this time.  VZ pays a good dividend at about 5.19% on its current price.  VZ currently pays a .50 dividend, up from .49 last July.  This higher dividend resulted in a yield on my basis of 5.74% when last paid in February 2012.

I am a little behind reporting my option activity this week.  My Father-in-law is dying and we have been spending a lot of time at his house to be with and help care for him.  Consequently, I will only do a recap of those trades that I have been able to make this week.

The following trades all occurred on Monday, 3/19/12:

I sold 4 F Jul12 $14 Covered Calls for a net deposit of $108.94 in an IRA account.  I also sold 1 F Jul12 $14 Covered Call in another IRA account for a net deposit of $23.24.

I sold 2 BALT Sep12 $7.50 Covered Calls for a net deposit of $10.48 in an IRA account.

I sold 2 TIE Sep12 $17 Covered Calls for a net deposit of $70.48 in an IRA account.

I sold 2 VZ Apr12 $40 Covered Calls for a net deposit of $58.48 in an IRA account.

I sold 8 YHOO Jul12 $17 Covered Calls for a net deposit of $329.94 in an IRA account.

The following trade occurred on Tuesday, 3/20/12:

I BTC 1 C Apr12 $34 Covered Call and STO 1 Sep12 $35 Covered Call for a net deposit of $90.49 in an IRA account.

All of the Monday trades, with the exception of the single F trade, were to place new positions on stock whose previous Covered Calls expired worthless last Friday.  The single F Covered Call sale was on some F shares that I had been sitting of waiting for the stock to appreciate.  I finally decided that it was not going to appreciate anytime soon so decided to go ahead and sell the Call.

My C Covered Call was in the money and I just wanted to capture some additional option premium while increasing the strike price by $1.  It is still in the money but I am okay if it is called away because I am profitable at this point.

Many of the stocks that I own and write Covered Calls upon also pay dividends.  Dividends occur on a regular basis and add significantly to my annual investment income.  Year to date I have received a total of $1,778.22 in dividends in my various accounts for 2012.  My year to date average monthly dividends received is currently $889.11.  The year-to-date dividends currently represent about 25.51% of my average monthly investment cash flow and about 2.38% return on my current basis value.

My YTD dividends are up by $101.20 on a monthly average from last year.  That represents a 12.84% increase to date year over year.  I attribute the increased dividends to a few companies raising their dividends and to my purchasing additional dividend paying stocks.  During February, I received notice of the following dividends paid in various accounts for a total of $687.71.

Div-3-1-12

Please notice that PGF is an ETF and pays dividends monthly.  The annualized dividend yield for PGF is based upon the simple and false assumption that it will pay the same dividend each month for the next 12 months.  The actual annualized dividend yield may be more or less than illustrated here.

I use my basis per share to determine the simple and annualized percentage return because I feel that it gives me a better representation of the value of the dividends as they relate to my portfolio.  My basis may be above or below the market price which causes my return to be lower or higher than published yields for a stock.  I calculate my basis per share as my acquisition price less any option premiums received on those shares.  I do not use dividends to reduce my basis.