Covered Call Picks (FSLR,SQNM,NFLX,GRPN,AMLN)
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.
|FSLR||First Solar Inc||22||23||1.9||8.50%||May-12|
|AMLN||Amylin Pharmaceuticals Inc||24.3||25||1.6||6.50%||May-12|
First Solar Inc (FSLR) is currently trading at $22. Its 52 week range is between $20.02 and $147.2.
Sequenom Inc (SQNM) is currently trading at $3.93. Its 52 week range is between $3.52 and $8.71.
Netflix Inc (NFLX) is currently trading at $104.26. Its 52 week range is between $62.37 and $304.79.
Groupon Inc (GRPN) is currently trading at $13.56. Its 52 week range is $12.95 and $31.14.
Amylin Pharmaceuticals Inc (AMLN) is currently trading at $24.28. Its 52 week range is between $8.03 and $25.84.
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
- Is Bank Lending a Concern? | Financial Sense
- Praxis Seeks to Revive the Apprenticeship Model of Employment | Financial Sense
- Christian Malanga: New Government Could Free the Congo and Provide Vast Opportunity for Investors | ZeroHedge
- Turkish Hackers Threaten To Wipe Millions Of iPhones; Demand Ransom From Apple | ZeroHedge
- Vegas Strip Partially Shut After One Person Shot Dead; Gunman Surrenders After Barricade Stand Off With police | ZeroHedge
- US Debt of $20 Trillion Visualized In Stacks Of Physical Cash | ZeroHedge
- Cook County Illinois Suffers Largest Population Drop In Entire US | ZeroHedge
The most relevant financial news and articles from the Internets
- Inside the stunning new headquarters of a New York design startup that creates... | Business Insider
- 'I'm not going to deny that': Congressman responds to... | Business Insider
- There's a reason the job market doesn't feel like it... | Business Insider
- Laptop Computer Reviews - BusinessWeek | BusinessWeek
- Palantir, the War on Terror's Secret Weapon | BusinessWeek
- Facebook announced a surprising partnership with Amazon (... | Business Insider
- Seeing how the highest and lowest-earners spend their money... | Business Insider