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
- Will Next Week Be The Start Of The Crash Of The US Dollar? | ZeroHedge
- Diversification Is For Dummies - The Nifty Nine Never Mattered More | ZeroHedge
- One by One the Central Banks Are Losing Control | ZeroHedge
- Why The Obamacare Exchanges Are Failing | ZeroHedge
- Shanghai Futures Exchange Appeals To Sellers: "Please Be Rational" | ZeroHedge
- Why China Hit The Panic Button On Metals Traders (In 1 Simple Copper Chart) | ZeroHedge
- Swiss Bank Hits Customers With Negative Interest Rates; Crazy? What About Velocity? | Financial Sense
The most relevant financial news and articles from the Internets
- HSBC is on the cusp of abandoning Britain | Business Insider
- Gunmen kill four Egypt policemen south of Cairo: ministry... | Business Insider
- Macedonia erects fence on Greek border to control... | Business Insider
- Inside the dog-filled... | Business Insider
- Rain, ice coat parts of Texas, Oklahoma and Arkansas | Business Insider
- Too many bowls? At least 2 losing teams will play in bowls... | Business Insider
- The many health impacts of climate change | Business Insider