Today, 5/13/11, I BTC 2 YHOO May11 16 Puts and STO 2 YHOO Oct11 15 Puts for a net deposit of $120.97 in an IRA account.  My basis for these YHOO shares would now be about 13.27 plus trading costs if Put to me.  This trade provides about a 4.0% simple yield and about an annualized 9.02% yield on my potential basis.  In addition to the cash flow, this transaction reduced my potential acquisition price and basis by one dollar per share or $200 total.

I felt pretty comfortable with my May11 16 Puts, expecting them to expire worthless next week.  And then there came the news about Alibaba transferring all of the Alipay interests to Jack Ma in China.  Yahoo owns a substantial portion of Alibaba (about 30% if I remember right) and Alipay was apparently considered to be a jewel among Yahoo investments.  Yahoo is saying they were only recently told of the transfer and Alibaba says that Yahoo was told back in 2009.  At the moment nobody seems to know where lies the truth of the matter.  That was a fairly surface description of the issue but is generally why Yahoo seems to be falling and why I decided to roll out and down my May Puts.

Today, 4/18/11, I sold 2 YHOO May11 16 Puts for a net deposit of $116.47 in an IRA account.  I am considering these Puts as a continuation of the Put trade that expired in March and April.  As such, my basis for these YHOO shares, if put to me, would be 14.88, excluding trading costs.

This trade provides a simple yield of about 3.63% and an annualized yield of about 40.11% on my cost (not my basis) if the shares are assigned to me.  The annualized return is so high because there were only 33 days left to expiration on these Puts.

As you may remember, I already own 600 YHOO shares in this same IRA account with an average basis of 17.20 and Covered Calls on them for the Jul11 19 strike.  I suspect that these Puts will expire worthless but if not, I will sell Jul11 Covered Calls and add them to my existing 600 shares if they expire worthless to further average down my basis and sell Covered Calls on the lot.

YHOO does not pay a dividend so it does not meet my general investment goals.  However, I am finding that it is not a bad position to trade around…at least not at the moment.  Even so, I am a little amazed that my YHOO Puts continue to expire worthless.

The YHOO! Finance analysts have a 12 month price target of $18.55, up slightly from the $18.48 when I looked last month with a continuing 2.5 opinion being expressed by the various analysts that contribute there.

I repeat what I said the last two months that I had been hesitant to sell Puts on YHOO in the past but they have been so profitable to me that I am beginning to look upon them as a part of my portfolio even though they do not pay a dividend.  A general rule I am using for selling Puts on YHOO, and other stocks, is that they must be able to reduce the basis when combined with other shares I own it the same account.  At this point YHOO continue to satisfy that rule.

Today, 3/21/11, I sold 2 YHOO Apr11 16 Puts for a net deposit of $62.47 in an IRA account.  I am considering these Puts as a continuation of the Put trade that expired in March.  As such, my basis for these YHOO shares, if put to me, would be 15.46, excluding trading costs.

This trade provides a simple yield of about 1.45% and an annualized yield of about 27.30% on my cost if the shares are assigned to me.  The annualized return is so high because there were only 26 days left to expiration on these Puts.

As you may remember, I already own 600 YHOO shares in this same IRA account with an average basis of 17.20 and Covered Calls on them for the Jul11 19 strike.  I suspect that these Puts will expire worthless but if not, I will sell Jul11 Covered Calls and add them to my existing 600 shares if they expire worthless to further average down my basis and sell Covered Calls on the lot.

YHOO does not pay a dividend so it does not meet my general investment goals.  However, I am finding that it is not a bad position to trade around…at least not at the moment.  I feel that there is about an even chance that these current Puts will be assigned to me but you never know.  YHOO! Finance continues to have a 12 month price target of $18.48, up a little from $18.19 back in January, with a 2.5 opinion being expressed by the various analysts that contribute there.

I repeat what I said last month that I had been hesitant to sell Puts on YHOO in the past but they have been so profitable to me that I am beginning to look upon them as a part of my portfolio even though they do not pay a dividend.  A general rule I am using for selling Puts on YHOO, and other stocks, is that they must be able to reduce the basis when combined with other shares I own it the same account.  At this point YHOO continue to satisfy that rule.