Today, 8/24/10, I sold 2 YHOO Oct10 15 Puts for a net deposit of $30.47 in an IRA account.  My basis for these YHOO shares is now 13.62.

This trade provides a 1.11% simple yield and an annualized 7.71% yield on my basis.  While nothing to get real excited about, 7.71% is not a bad return and is above my current average annualized return of 4.58% for my option premiums.  If called away, my simple return will be 10.15% with an annualized return of 70.64%.

I own an additional 400 YHOO shares in this same IRA account with a basis of 19.88 with Covered Calls expiring in Jan11.  I had originally thought that I would also sell Jan11 Covered Calls on the new shares well out of the money with the idea that I would combine them with the prior 400 shares to reduce my average basis.  I took another look at the possibilities and instead decided to sell the Oct10 Calls at a lower strike price.  I get a smaller premium amount but increase my annualized return while increasing my total dollar return if the shares are called away.  In essence, I am looking at these new shares as a short term trade.

YHOO does not pay a dividend so it does not meet my general investment goals.  However, as a trade at this level YHOO may provide a pretty decent return.