Covered Call Picks (BBRY,MBI,CLF,AKAM,CHK)
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 $14.99. Its 52 week range is between $6.22 and $18.32.
MBIA Inc (MBI) is currently trading at $11.97. Its 52 week range is between $6.78 and $13.7.
Cliffs Natural Resources Inc (CLF) is currently trading at $22.09. Its 52 week range is between $21.35 and $73.63.
Akamai Technologies Inc (AKAM) is currently trading at $34.69. Its 52 week range is between $25.9 and $42.53.
Chesapeake Energy Corp (CHK) is currently trading at $22.46. Its 52 week range is between $13.32 and $26.09.
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
- This Is The Chinese Documentary That Got Over 30 Million Views In One Day | ZeroHedge
- Gold Demand in Greece, Italy, Spain, Russia, Germany, UK and U.S. | ZeroHedge
- Lehman-Like Spending Collapse Sparks Panic-Buying - Nasdaq 5,000; S&P, Dow Records | ZeroHedge
- Janet Yellen Is A Coward | ZeroHedge
- Meet The Philly Fed's New President (No, He Didn't Work At Goldman) | ZeroHedge
- More Flash Crashes To Come As Shadow Banking Liquidity Collapses | ZeroHedge
- NYC Residents Pay $2-3,000 A Month For “Micro-Apartments” As Luxury Car Sales Outpace Regular Car Sales | ZeroHedge
The most relevant financial news and articles from the Internets
- Pre-... | StreetInsider.com
- Hong Kong lawmakers hand themselves in to police over... | Business Insider
- Lumber Liquidators shares are crashing after a damning '60 Minutes'... | Business Insider
- German finance chief softens tone, says Greece 'needs... | Business Insider
- Ton-up Root stars, Pakistan seek Zimbabwe boost... | Business Insider
- Kerry, Lavrov open tough talks on Ukraine, Nemtsov | Business Insider
- Greece's economy is tanking again and the new... | Business Insider