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
- Today’s Quiz: Donald Trump, Bernie Sanders, Hillary Clinton – Who Said It? | Financial Sense
- Credit Suisse Raises Gold, Silver Price Targets To $1,500; $18.75, Sees "Significant Physical Deficit" | ZeroHedge
- Rotten To The Core | ZeroHedge
- WTF Chart Of The Day: When Central Planning Fails | ZeroHedge
- Soros: Brexit Has "Unleashed" A Financial Crisis Similar to 2008 | ZeroHedge
- Revenge Of The Rubes - Why The Days Of The Financial Elite's Rule Are Numbered | ZeroHedge
- Venezuela: Mired in Crisis, With No Clear Path Ahead | Financial Sense
The most relevant financial news and articles from the Internets
- These 10 skills are great ones to have on your résumé right now | Business Insider
- These are the 20 most expensive neighborhoods for renters in the US | Business Insider
- Hallucinogens Legally Sold as 'Bath Salts' a New Threat | BusinessWeek
- CHART: Brexit may be about to add to this depressing... | Business Insider
- 7 gadgets and tech accessories that are perfect for the pool or beach | Business Insider
- The founder of a popular dating app wants to see more people... | Business Insider
- Meet the guy in charge of tackling San Francisco's homeless crisis | Business Insider