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
- Unusually Massive Protests Erupt in Japan Against Forthcoming "War Legislation" | ZeroHedge
- Not "Unequivocally Good" - Canada Enters Recession | ZeroHedge
- America’s Ballooning Student Debt: Lessons Learned From Chile | Financial Sense
- China PMI Contracts Fastest Since February-March 2009 | Financial Sense
- Another Bit of Palo Alto For You | ZeroHedge
- WHAT DID I MISS? | iBankCoin.com
- Illinois Pays Lottery Winners In IOUs After $30K/Month Budget "Guru" Fails To Produce Deal | ZeroHedge
The most relevant financial news and articles from the Internets
- America's Best Young Entrepreneurs 2011 | BusinessWeek
- 'A Sinner in Mecca' documents gay Muslim pilgrimage | Business Insider
- I unexpectedly lost 10 pounds after trying one of the oldest diets in the... | Business Insider
- How to control your iPhone with your head | Business Insider
- Horror film legend Wes Craven dies at 76 | Business Insider
- These charts show the immensity of the US' defense budget | Business Insider
- The truth about 'the most interesting man in the world... | Business Insider