Yesterday, 1/23/12, I sold 8 YHOO Mar12 $18 Covered Calls for a net deposit of $89.94 in an IRA account.  My basis for these YHOO shares is now $15.70.  This trade provides a simple return of about a .71% and an annualized return of about 4.81% on my prior basis.

Jerry Yang’s leaving the company has once again stirred rumors of YHOO being acquired by another party.  I suppose that is possible but I am not hearing any serious comments of the possibility.  The stock has pretty much been drifting sideways since October 2011.  I would have liked to sell the $19 strike once again but decided to sell the $18 strike this time in order not to sell too far into the future.  If something should happen and I am called away prior to March expiration I will be happy with the profit I will have realized.  On the other hand, I have rather enjoyed playing with YHOO and will probably attempt to roll out and up these Calls, if it looks like I might be called away.

YHOO does not pay a dividend so it does not meet my general investment goals.  However, as I suggested above, I am starting to think that I might like to continue owning it to sell the Covered Calls and, in effect, create my own dividend while at the same time decreasing my basis.  As an FYI, I have received a net total of $7,968.40 in option premiums on YHOO going back to 2006.

The 25 YHOO analysts currently have a 12-month price target of $17.74, down from $18.16 in November, with a recommendation of 2.6, down from 2.5, where 1.0 is a Strong Buy and 5.0 is a Strong Sell.  S&P continues a 12-month price target of $20.00 and a Strong Buy recommendation.  MarketEdge has a price opinion of $15.52, up from $14.71 last November, and an Avoid recommendation, down from an earlier Long recommendation.

Today, 11/21/11, I sold 8 YHOO Jan12 $19 Covered Calls for a net deposit of $209.94 in an IRA account.  My basis for these YHOO shares is now $15.81.  This trade provides a simple return of about a 1.63% and an annualized return of about 9.77% on my prior basis.

There are still some rumors of YHOO being a takeover target although I have not heard any comments this past week.  The stock has been drifting down for the past 10 days.  I don’t know what to believe but I decided to go out two months this time to continue selling the $19 strike price at a reasonable level.  If something should happen and I am called away prior to January expiration I will be happy with the profit I will have realized.  On the other hand, I have rather enjoyed playing with YHOO and will probably attempt to roll out and up these Calls, if it looks like I might be called away.

YHOO does not pay a dividend so it does not meet my general investment goals.  However, as I suggested above, I am starting to think that I might like to continue owning it to sell the Covered Calls and, in effect, create my own dividend while at the same time decreasing my basis.  As an FYI, I have received a net total of $7,878.46 in option premiums on YHOO going back to 2006.

The 22 YHOO analysts currently have a 12-month price target of $18.16 with a recommendation of 2.5 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.  S&P has a 12-month price target of $20.00 and a Strong Buy recommendation.  MarketEdge has a price opinion of $14.71 and a Long recommendation but their opinion is a little old, dating from 9/26/11.

Today, 10/24/11, I sold 8 YHOO Nov11 $19 Covered Calls for a net deposit of $247.91 in an IRA account.  My basis for these YHOO shares is now 16.07.  This trade provides a simple return of about a 1.89% and an annualized return of about 11.51% on my prior basis.

There are a number of comments about YHOO being a takeover target with MSFT and GOOG being included in the potential suitors.  I am also hearing comments that YHOO does not necessarily consider itself on the market.  I don’t know what to believe except that I was able to sell the front month option at a strike price $2 higher than the ones that just expired at a reasonable price.  Even if I am called away prior to November expiration I will be happy with the profit I will have realized. 

I considered selling the Jan12 17.50 or 19 strikes.  The 17.50 strike would have generated the greatest current cash flow but the October 17 strike produced the greater annualized return.  The greater cash flow was tempting but the greater annualized return was more compelling.  The return on investment is almost always better than the simple cash flow which can be deceiving.  I am pretty sure that if YHOO appears to be above my strike price in October that I will be able to roll my Calls out and quite possibly up.

YHOO does not pay a dividend so it does not meet my general investment goals.  However, as I suggested above, I am starting to think that I might like to continue owning it to sell the Covered Calls and, in effect, create my own dividend while at the same time decreasing my basis.  As an FYI, I have received a net total of $7,420.61 in option premiums on YHOO going back to 2006.