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.

As I said earlier I was out of town and pretty much out of touch for a few days.  During that time E*Trade issued me a margin call and then swooped in on 10/13/08 and did some trading for me.  I had previously spoken to my E*Trade representative and given him my cell phone number but of course he lost it and could not contact me.  So, with that background, here is what happened.

BTC 5 AUY Jan09 15 Puts at a cost of $4961.74 which represents a net cost of 2323.53.

BTC 2 WFC Oct08 30 Covered Calls at a cost of $279.49 which represents a net profit of 31.01.

BTC 4 AA Apr09 40 Puts at a cost of $10850.99 which represents a net cost of 6962.01.

BTC 4 MSFT Jan10 35 Covered Calls at a cost of $330.99 which represents a net profit of 814.00.

BTC 2 DSX Dec08 40 Puts at a cost of $5195.49 which represents a net cost of 2525.00.

Sold 200 WFC for $5789.97 which represents a profit of 679.97.

Sold 400 MSFT for $9803.95 which represents a lost of 784.05.

When all is said and done I didn’t feel too bad this time about their actions to satisfy my margin call when I could not be reached.

This morning I BTC 2 BAC Sep08 35 Covered Calls and STO 2 BAC Jan09 40 Covered Calls for a net deposit of $75.01 in an IRA account.  My basis for these BAC shares is now 45.19.

Unlike the ACAS transactions I wrote about a couple of minutes ago this is a trade that I wanted to make because my basis is greater than my strike price.  I like owning BAC because of the dividend (for as long as they pay at the current rate) so would like to keep it in the account.  Even though I raised the strike price by 5 for these puts I rather expect that BAC will be above 40 before the Jan09 options expire.  If so, I will need to roll BAC out again and am hopeful that I can roll it up again.

BAC is one of Jim Cramer’s four “fortress bank” stocks that he believes will survive and prosper.  The other “fortress banks” are USB, WFC and JPM.  In addition to BAC I also own shares of WFC in my taxable account.