Covered Call Picks (DMND,IMAX,OVTI,CTRP,MHS)
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.
|DMND||Diamond Foods Inc||24.5||25||1.7||6.90%||Mar-12|
|OVTI||Omnivision Technologies Inc||16.8||17||1||6.00%||Mar-12|
|CTRP||Ctrip.com International Ltd||24.7||25||1.5||5.90%||Mar-12|
|MHS||Medco Health Solutions Inc||64||65||3.8||5.90%||Mar-12|
Diamond Foods Inc (DMND) is currently trading at $24.5. Its 52 week range is between $21.41 and $96.13.
IMAX Corp (IMAX) is currently trading at $23.75. Its 52 week range is between $12.57 and $38.
Omnivision Technologies Inc (OVTI) is currently trading at $16.75. Its 52 week range is between $10.15 and $37.05.
Ctrip.com International Ltd (CTRP) is currently trading at $24.69. Its 52 week range is $22.02 and $50.57.
Medco Health Solutions Inc (MHS) is currently trading at $64.01. Its 52 week range is between $44.6 and $66.38.
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
- Trade Policy and Economic Decline | Financial Sense
- It's Official: Yahoo Acquires Tumblr For $1.1 Billion, Promises Hipsters "Not To Screw It Up" | ZeroHedge
- Is Bad Economic Data Good for Stocks? | Financial Sense
- Another Reason to Look for a Precious Snapback | iBankCoin.com
- Brussels Puts Spain Under Surveillance | Financial Sense
- TiCKeTS FoR THe FiaT BaBY... | ZeroHedge
- Theory of Interest and Prices in Paper Currency Part II (Mechanics) | Financial Sense
The most relevant financial news and articles from the Internets
- 50-Day SMA Crossers 05/20... | StreetInsider.com
- Suze Orman, Debit-Card Dealer | BusinessWeek
- 2012 Honda CR-V | BusinessWeek
- Which Is America's Best City? | BusinessWeek
- The US Military Has The Most Sophisticated Casualty Evacuation System In The World | Business Insider
- Top Silicon Valley Advisor Explains The Key Rules Behind Every Great Startup Idea | Business Insider
- If You're Not In European Equities, Then You're Out Big Time | Business Insider