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.