Today, 8/23/11, I sold 4 ZQK Feb12 $5 Covered Calls for a net deposit of $106.97 in my taxable account.  My basis for these ZQK shares is now $9.00.  This transaction represents a simple return of about 2.89% and an annualized return of about 5.76% on my basis if held to expiration.

I don’t have much to say about ZQK.  I have been disappointed with it and will exit it at some point by allowing them to be called away.  A big reason for that is that ZQK does not pay a dividend and as you know by now I have a strong bias toward dividend paying stocks.  The other reason is that the options are not all that profitable.  On the other hand, as my basis is decreased the return on the basis tends to increase.  As with other stocks that I own I may find that just continuing to sell Covered Calls may begin to be worthwhile.

I chose the $5 strike price because it has proven to be a good one for me in the past even though ZQK has moved above $5 now and then this past year. 

There continues to be fewer analysts following ZQK than there had been.  For instance, S&P does not appear to have a current evaluation on it.  Those analysts that are covering ZQK all have a negative rating on it at this time.  MarketEdge currently has a price opinion of $4.21 which is down from $4.55 when I last checked back in Feb11.  The Yahoo Finance analysts currently have a 12 month price target of $5.38 and an opinion of 2.6 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.  If they are right I should be able to continue to sell the $5 strikes or roll out my existing Calls at the same strike for awhile, each time reducing my basis by a few cents.

Today, 8/22/11, I sold 1 ZQK Feb11 3 Put for a net deposit of $34.24 in my taxable account.  My basis for these ZQK shares, if Put to me, would be about 2.66.  This transaction represents a simple return of about 12.87% and an annualized return of about 25.66% on my basis.

I don’t have much to say about ZQK.  I have been disappointed with it and will exit it at some point and probably never own it again.  A big reason for that is that ZQK does not pay a dividend and as you know by now I have a strong bias toward dividend paying stocks.  The other reason is that generally the options don’t yield very much, at least not at this time.

After all that, I decided to go ahead and sell this Put on ZQK.  I already own 400 shares in this account with a basis of $9.26.   I have a little cash not being used in this account and decided that I could afford to average down on ZQK if these shares get assigned to me.

The 8 Yahoo analysts have a 12 month target is $5.38 with a range of $6 to $6.  The mean recommendation is slightly biased toward a sell at 2.6 where a 1.0 is a Strong Buy and 5.0 is a Strong Sell.  The Stochastic and Williams %R indicators indicate that ZQK is oversold.  I feel relatively okay with this Put but realize that there is a good possibility that I will own 100 additional shares in February.

Today, Feb 24, 2011, I sold 4 ZQK Aug11 5 Covered Calls for a net deposit of $130.94 in my taxable account.  My basis for these ZQK shares is now 9.26.  This transaction represents a simple return of about 3.41% and an annualized return of about 6.23% on my basis.

I don’t have much to say about ZQK.  I have been disappointed with it and will exit it at some point by allowing them to be called away.  A big reason for that is that ZQK does not pay a dividend and as you know by now I have a strong bias toward dividend paying stocks.  The other reason is that the options don’t yield very much; however, the option yield is up considerably this time.  Part of the reason is because I’ve lowered my basis by the Feb11 Put assignment of 100 shares which were acquired at a net cost of 5.20 per share.

I was actually looking at selling an Aug11 $4 Put but ran out of time to make that trade today.  I’ll look at it again tomorrow morning to see if it might still be viable for me.

I chose the $5 strike price because it has proven to be a good one for me in the past even though ZQK has moved above $5 now and then this past year.  I notice that there appear to be fewer analysts following ZQK than there had been.  For instance, S&P does not appear to have a current evaluation on it.  Those analysts that are covering ZQK all have a negative rating on it at this time.  MarketEdge currently has a price opinion of $4.55 which is up from $4.47 when I last checked back in Aug10.  The Yahoo Finance analysts currently have a 12 month price target of $4.97 and an opinion of 3.2 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.  If they are right I should be able to continue to sell the $5 strikes or roll out my existing Calls at the same strike for awhile, each time reducing my basis by a few cents.

My final note is that the QuikSilver corporate headquarters is only about a mile from where I live.  Their annual shareholders meeting is scheduled next month and I expect to be able to attend.  Other than small local companies that I’ve had interests in, I’ve never actually been to the shareholder meeting of one of the companies of which I own shares.  I hope it is a positive experience.  It should certainly be interesting.