Covered Call Picks (NUGT,WLT,SPWR,TIVO,GRPN)
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.
|NUGT||Direxion Daily Gold Miners Bull 3X Shrs||11.9||12||1.9||15.50%||June 2013|
|WLT||Walter Energy Inc||17.4||17.5||1.8||10.10%||June 2013|
|SPWR||SunPower Corp||14.9||15||1.5||9.80%||June 2013|
|TIVO||TiVo Inc||11.9||12||1.1||9.60%||June 2013|
|GRPN||Groupon Inc||5.84||6||0.5||9.20%||June 2013|
Direxion Daily Gold Miners Bull 3X Shrs (NUGT) is currently trading at $11.94. Its 52 week range is between $9.61 and $97.05.
Walter Energy Inc (WLT) is currently trading at $17.35. Its 52 week range is between $16.08 and $67.
SunPower Corp (SPWR) is currently trading at $14.87. Its 52 week range is between $3.71 and $15.65.
TiVo Inc (TIVO) is currently trading at $11.85. Its 52 week range is between $7.75 and $13.49.
Groupon Inc (GRPN) is currently trading at $5.84. Its 52 week range is between $2.6 and $14.93.
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
- Richard Russell: The Passing of an Icon | Financial Sense
- Oil Jobs Lost: 250,000 and Counting, Texas Likely to See Massive Layoffs Soon | Financial Sense
- Former CIA Deputy Director Gives A Stunning Reason Why Obama Has Not Attacked ISIS' Oil Infrastructure | ZeroHedge
- Matthew Mather's Darknet Shows Reality Is Not Far From Fiction | Financial Sense
- Russia Sends 10,000 AK-47s To Afghanistan As Government Mulls "Inviting" Moscow To Help Fight "Terrorists" | ZeroHedge
- How Refugees Are Admitted Into The U.S. | ZeroHedge
The most relevant financial news and articles from the Internets
- Inside the dog-filled... | Business Insider
- Here's how to write an email to a potential employer | Business Insider
- 'It's similar to North Korea': Inside ISIS's sophisticated strategy to... | Business Insider
- Hokies give Beamer 1 more win over Virginia, 23-20 | Business Insider
- Singer Sinead O'Connor 'threatens suicide'... | Business Insider
- AP Sources: Rutgers fires coach Flood and AD Hermann | Business Insider
- Iran seeks $25 bn as new oil contract offer unveiled | Business Insider