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
- Brussels Puts Spain Under Surveillance | Financial Sense
- Friday Humor: Summing It Up | ZeroHedge
- Theory of Interest and Prices in Paper Currency Part II (Mechanics) | Financial Sense
- IRS Official In Charge During Tea Party Targeting Now Runs Health Care Office | ZeroHedge
- THe PRoCToLoGiST MaY 2013... | ZeroHedge
- This Market Won’t Top Out Until… | iBankCoin.com
- Saturday Humor: The Fed Is Hiring | ZeroHedge
The most relevant financial news and articles from the Internets
- Beyoncé Is Pregnant With Her Second Child [Report] | Business Insider
- Here's How A Successful Lawyer Knew For Sure She Was A Sociopath | Business Insider
- Google's Plan To Take Over The World (GOOG) | Business Insider
- Ten Things Only Bad Managers Say | BusinessWeek
- Magazine Getting Backlash After Printing Zoe Saldana's Weight On... | Business Insider
- The Ingenious 'HoodiePillow' Is The Ultimate Plane Flight Accessory | Business Insider
- It's Worth Navigating The Social Media Minefield Even If You Fear It | Business Insider