Buying Wells Fargo again ($25.5)

I bought 5k shares on 10/17 for $24.66.  Today, I am buying another 5k shares for $25.3

Needless to say, I like the Q3 earning report that I see.  The management is demonstrating great discipline and excellent execution skill.  They handled the Wacovia merger beautifully.  I have to think that it is very challenging to merge those 2 giant operation in the short 3 year term.

I will have some covered call position (AMZN and BRKB) execued this Friday.  So, i will have some free cash that allows me today's action.

I bought 5,000 shares of WFC at $25.3.  Immediately sell Nov $24 covered call.  Premium is $2.05.  And early November, WFC will give out $0.12 dividend.

So, the action looks something like this:

10/19/2011   WFC     25.3    11/19/2011    2.17    45.45   24   50   3.44%    $4,304.55  31 40%  $126,500.00

If by Nov 19, 2011, WFC stock price is above $24/share, then, this position will be called, and I will declare this move a success.  Potential gain is 3.44% in 31 calender days.  Or annuallized 40%

If the price is below $24 a share, i will be happy to hold it a the cost of $25.3 - 2.05-0.12= $23.13. 

I am reserving some cash that in case WFC drop near $23, I will pull the trigger and buy another batch.  The future stock price for WFC will move up and down base on macro environment.  What will stay solid is their increasing customer base.  Their enhanced market share.  Best of all, their strong management team.  Those element will not be changing anytime soon.

I do not care too much if this action success or fail.  I do know current price is a great bargain.


RESULT:  Success