Covered Call Picks (GMCR,JCP,DDD,KORS,HLF)
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.
Green Mountain Coffee Roasters Inc (GMCR) is currently trading at $43.28. Its 52 week range is between $17.11 and $71.15.
J C Penney Company Inc (JCP) is currently trading at $21.01. Its 52 week range is between $15.69 and $43.18.
3D Systems Corp (DDD) is currently trading at $62. Its 52 week range is between $18.93 and $71.98.
Michael Kors Holdings Ltd (KORS) is currently trading at $57.47. Its 52 week range is between $29.32 and $60.
Herbalife Ltd (HLF) is currently trading at $38.67. Its 52 week range is between $24.24 and $73.
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
- Today’s Movers | iBankCoin.com
- Two-Thirds Of Chinese Consumers No Longer Trust Western Fast-Food As "Meat Scandal" Spreads Across Asia | ZeroHedge
- MoDeRNiZeD STaTe DePaRTMeNT SeaL... | ZeroHedge
- Chile con Bottom Recipe | iBankCoin.com
- Flattening Out | iBankCoin.com
- Trade Ideas For Wednesday | iBankCoin.com
- Flight MH-17 Black Boxes To Be Analyzed In "Impartial" London | ZeroHedge
The most relevant financial news and articles from the Internets
- 9 Things We Just Learned About Vladimir Putin's Life | Business Insider
- Ben Gurion Airport Isn't The Only Place American Planes Can't Fly | Business Insider
- Amazon's Hit Man | BusinessWeek
- Why Apple Stock Is Gaining Today | TheStreet.com
- America's Best Young Entrepreneurs 2011 | BusinessWeek
- Suze Orman, Debit-Card Dealer | BusinessWeek
- A 30-Year-Old Law Is Creating A Crisis In San Francisco | Business Insider