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
- The 2015 Untrustworthies Report - Why Social Security Could Be Bankrupt In 12 Years | ZeroHedge
- Chinese Stocks Drop, End Worst Month Since August 2009; US Equity Futures Flat | ZeroHedge
- Spinning Higher, As Scheduled | iBankCoin.com
- Great Graphic: China’s Holding of Treasuries | Financial Sense
- This Is How The Much Anticipated "Second Seasonal Adjustment" Affected Q1 GDP | ZeroHedge
- Quantum Geopolitics | Financial Sense
- Brazil's Economy Slides Into Depression, And Now Olympians Will Be Swimming In Feces | ZeroHedge
The most relevant financial news and articles from the Internets
- Argentine exec pleads not guilty in FIFA case | Business Insider
- 'Mission: Impossible — Rogue Nation' may be the most fun movie you... | Business Insider
- Here's what happens when you mess with a... | Business Insider
- China's manufacturing shows zero growth in July | Business Insider
- Japan police arrest MtGox CEO over loss of bitcoins: media... | Business Insider
- Part number 'confirms' debris is from Boeing 777 | Business Insider
- Laptop Computer Reviews - BusinessWeek | BusinessWeek