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
- IT IS TIME | iBankCoin.com
- The Minimum Price for Gold, Part II | ZeroHedge
- Why Russia Will Send More Troops to Central Asia | Financial Sense
- Weekday Wrap-Up: Did a Billion-Dollar Buyout Just Signal the Bottom in Oil? | Financial Sense
- How Children Of The 0.001% Choose Their College | ZeroHedge
- One Day After Recommending the Veritaseum Leveraged Macro Trade Against Goldman's Earnings, 50% Profit! | ZeroHedge
- A World Of Bubbles | ZeroHedge
The most relevant financial news and articles from the Internets
- 10 things you need to know in markets today | Business Insider
- Here's how humans are going to find alien life | Business Insider
- 300 US troops in Ukraine to train Ukrainian forces: US... | Business Insider
- Messi nets 400th goal as Barca edge past Valencia | Business Insider
- U.S. Kids Using Media Almost 8 Hours a Day - BusinessWeek | BusinessWeek
- A local Republican leader says Jeb Bush could have a... | Business Insider
- Unusual 11 Mid-... | StreetInsider.com