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
- Pro-Russia Gunmen Block OSCE Monitors Entering Ukraine; Stymie Obama's Plan | ZeroHedge
- Remember These Days | iBankCoin.com
- The Evolution of the CPI | Financial Sense
- Trimming a Piece of That Mullet | iBankCoin.com
- China Is Crashing … As Predicted | ZeroHedge
- Elevating Markets: A Signal of Reviving Bank Lending? | Financial Sense
- Will Emerging Markets Come Back? | Financial Sense
The most relevant financial news and articles from the Internets
- A New Poll Has Some Bad News For NYC Mayor Bill de Blasio | Business Insider
- How To Find Out If Someone Unfriended You On Facebook | Business Insider
- The Truth About The Soda Machines At South By Southwest | Business Insider
- A US Destroyer Is Joining The Search For The Missing Malaysia Airlines 777... | Business Insider
- HOUSE OF THE DAY: Swedish DJ Avicii Spent $15.5 Million On This Bonkers... | Business Insider
- 23 Ridiculously Small Houses For Sale Right Now | Business Insider
- A Hedge Funder Paid Off A Retired Teacher's Debts After Reading Her Lament... | Business Insider