What's a Covered Call?

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.

Taking a punch to the nose are shareholders of Groupon Inc (GRPN) which hit a new 52-week low of $5.71 today. Joining the pity parade are shares of Nokia (NOK) and Facebook (FB) which are falling on heavy volume.

Research in Motion (RIMM) is nothing compared to the iPhone by Apple (AAPL) and Google's (GOOG) Android based phones.  RIM will never catch its competitors, even Nokia (NOK) has a better chance at a turnaround. 

Wal-Mart (WMT) continues to press higher to all-time highs and its making 6 people in particular extremely wealthy.  Nokia (NOK) finally bounced while we dream of Peabody Energy (PEA) bouncing.  Take it away Saul.

Just when you thought Nokia (NOK) couldn't get any lower, surprise new 52-week low. Nokia hit $1.69 a share today.