Covered Call Picks (GMCR,KERX,HLF,KORS,NFLX)
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 $48.94. Its 52 week range is between $17.11 and $71.15.
Keryx Biopharmaceuticals Inc (KERX) is currently trading at $6.73. Its 52 week range is between $1.28 and $9.98.
Herbalife Ltd (HLF) is currently trading at $35.79. Its 52 week range is between $24.24 and $73.
Michael Kors Holdings Ltd (KORS) is currently trading at $55.87. Its 52 week range is between $31.75 and $60.
Netflix Inc (NFLX) is currently trading at $184.41. Its 52 week range is between $52.81 and $177.89.
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
- Gold Prices to 1-Week Low as Safe Haven Demand Falls | Financial Sense
- Traders: Millions By The Minute | iBankCoin.com
- When The Line Between Halloween & Real Life Terror Gets Blurred | ZeroHedge
- "Why I Will Not Submit To Medical Martial Law" | ZeroHedge
- NYC Doctor Confirmed Positive For Ebola; Contact With Girlfriend (Quarantine) & 3 Others; "Unlikely" Contagious On Subway | ZeroHedge
- New York, New Jersey Begin Mandatory Quarantines In Ebola Response | ZeroHedge
- 5 Things To Ponder: To QE Or Not To QE | ZeroHedge
The most relevant financial news and articles from the Internets
- Microsoft's Surface Found A Lifeline (MSFT) | Business Insider
- How One Woman Built A Multimillion-Dollar Cupcake Business With Just $33... | Business Insider
- TOM LEE: Stay Away From These 9 Stocks | Business Insider
- 3 Lawsuits Challenge Chipotle's Reputation As An Awesome Employer | Business Insider
- Microsoft Reveals Total Xbox Sales For Last Quarter (MSFT) | Business Insider
- Jim Cramer Says Amazon Needs to Deliver Better Results in the Next Quarter | TheStreet.com
- Jim Cramer's Blue Chip Fantasy Football Picks for Week 8 | TheStreet.com