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
- Energy on the Edge: Understanding the Challenge | Financial Sense
- An Angry Trader Rages: "There Is Nothing Normal About It" | ZeroHedge
- Kurt Kallaus: Still No Recession; Expect Mild Acceleration in 2016 | Financial Sense
- Paris Is Prologue | ZeroHedge
- 2015: The Last Christmas In America | ZeroHedge
- Greek Prime Minister Joins Diplomatic Scandal Between Russia And Turkey With 4 Tweets | ZeroHedge
- Energy Storage Tech Finally Starting to Compete With the Grid | Financial Sense
The most relevant financial news and articles from the Internets
- Pope says fundamentalism is 'disease of all religions... | Business Insider
- Book Review: <em>Thinking, Fast and Slow</em> by Daniel Kahneman | BusinessWeek
- Many black pastors say meeting with Trump not an... | Business Insider
- Hallucinogens Legally Sold as 'Bath Salts' a New Threat | BusinessWeek
- Bus overturns: 1 seriously hurt, dozens of minor injuries | Business Insider
- Police: Bus overturns, 1 serious injury, 34 minor injuries... | Business Insider
- Cities, counties demand action amid Illinois budget mess | Business Insider