Covered Call Picks (BBRY,VXX,VRTX,ZNGA,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.
Research In Motion Ltd (BBRY) is currently trading at $13.25. Its 52 week range is between $6.22 and $18.32.
iPath S&P 500 VIX ST Futures ETN (VXX) is currently trading at $23.27. Its 52 week range is between $20.97 and $105.
Vertex Pharmaceuticals Inc (VRTX) is currently trading at $46.97. Its 52 week range is between $35.26 and $66.1.
Zynga Inc (ZNGA) is currently trading at $3.52. Its 52 week range is between $2.09 and $15.91.
Netflix Inc (NFLX) is currently trading at $184.32. Its 52 week range is between $52.81 and $197.62.
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
- Chemicals Less Popular Than Financials and Homebuilders. But… | iBankCoin.com
- Weak Day For Me | iBankCoin.com
- Seeking Guidance...?! | ZeroHedge
- Obamacare Is Supposed To Sign Up 7 Million By March - 365,000 So Far | ZeroHedge
- 4 Reasons Growth Pains Will Replace Growth Gains in China | Financial Sense
- BlackRock Warns "High Valuations & Low Volatility Are A Lethal Mix" | ZeroHedge
- Daily Market Recap | Financial Sense
The most relevant financial news and articles from the Internets
- Nelson Mandela May Have Been The Only Person Who Addressed The Queen As... | Business Insider
- Things Are Getting Ugly In San Francisco:... | Business Insider
- This Brilliant Stop Motion Video Only Uses Photos Taken With Google Glass | Business Insider
- 10 Private And Embarrassing Emails That Went Viral On... | Business Insider
- Inside All Of This Weekend's Star-Studded Art Basel Parties In Miami [PHOTOS... | Business Insider
- Apple Will Disrupt and Destroy When It's Ready | TheStreet.com
- Pantene Produces An Overtly Feminist Ad — But It Won't Be Seen In The US | Business Insider