Covered Call Picks (MCP,NFLX,FB,LCC,BBY)
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.
Molycorp Inc (MCP) is currently trading at $8.78. Its 52 week range is between $5.75 and $35.79.
Netflix Inc (NFLX) is currently trading at $103.44. Its 52 week range is between $52.81 and $133.43.
Facebook Inc (FB) is currently trading at $30.95. Its 52 week range is between $17.55 and $45.
US Airways Group Inc (LCC) is currently trading at $14.67. Its 52 week range is between $5.81 and $15.5.
Best BUY Co Inc (BBY) is currently trading at $14.48. Its 52 week range is between $11.2 and $27.95.
MASTERY Bottom line:
There are pros and cons to writing covered calls. In theory, this strategy will out perform outright stock ownership if the stock price declines, remains the same, or slightly increases in price. The principal disadvantage of this strategy, on the other hand, is that profit potential can be limited if the underlying stock price advances sharply.
Best of the Blogs
Scanning and identifying the best blog entries every hour
- Iraq and Syria Follow Lebanon’s Precedent | Financial Sense
- Stocks Catching Down To Treasury's Fresh 15-Month Low Yields | ZeroHedge
- Is There Capitalism After Cronyism? | ZeroHedge
- Past Fear, Present Fear | ZeroHedge
- 5 Things To Ponder: Labor Day Edition | ZeroHedge
- Bueller, Bueller | Financial Sense
- Thanks to the Fed, the Patient Is Now Past the Point of No Return | ZeroHedge
The most relevant financial news and articles from the Internets
- 10 Tech Millionaires And Billionaires Who... | Business Insider
- JOB OF THE WEEK: Senior Director, Marketing Technology Solutions | Business Insider
- Why Bank of America, Citi, JPMorgan, Wells Fargo Still Face Hurdles | TheStreet.com
- An Al Qaeda-Linked Group Kidnapped Dozens Of UN Peacekeepers In The 'Disengagement... | Business Insider
- 8 Of The Most Ridiculously Expensive Gadgets Money Can Buy | Business Insider
- Frustrating Boston Scientific Is Not What the Investor Ordered | TheStreet.com
- Here's What Happens When You Have A Competitive Gamer Running Your... | Business Insider