What's a Covered Call?

The covered call is a strategy where an investor writes a call option contract (sells an option) while at the same time owning an equivalent number of shares of the underlying stock.If this stock is purchased simultaneously with writing the call contract, the strategy is commonly referred to as a buy-write.

While you may have heard that trading options is risky business, covered calls are actually a very conservative strategy, and most brokerages even allow retirement IRA accounts to write covered calls.

It was a huge week for some Mastery favorites which include Take-Two (TTWO), Dendreon (DNDN), and perhaps a chance to gamble a few bucks on $2 stocks.  Those two buck chucks include Metalico (MEA).  It's hard to believe MEA has fallen so hard, which is why we want to give it a look. 

Early December of 2012 Mastery recommended buying shares of Dendreon Corp (DNDN), Chipotle Mexican Grill Inc (CROX), and Crocs Inc (CROX). All three stocks were finally making a comeback from their respective 12 month lows.  Timing is everything.

Three stocks that are now comfortably off their 12 month lows are shares of Dendreon Corp (DNDN), Chipotle Mexican Grill Inc (CROX), and Crocs Inc (CROX).  These are great bottom fishing plays and they could really bounce if we don't go off the 'Fiscal Cliff'.

What's a Covered Call?

Disney (DIS) becomes super attractive and hopefully will kill Jar Jar Binks silently.  Ford (F) and Dendreon (DNDN) also made coin for its shareholders this week.

Earlier this month we said throwing a few bucks at Dendreon Inc (DNDN) when it was trading at $4.07 was worth the gamble.  Turned out it was in spades as DNDN shares are up 17% at $4.54.  Expectations were so low, that today's so-so news was enough to rally shares. 

What's a Covered Call?

We check in on our stocks we labeled as 'steak nacho good' and add one more to the mix.  Making the cut are Ford Motor (F), Dendreon Corp (DNDN), McDonald's Corp (MCD), and Xerox Corp. (XRX).