Covered Call Picks (ARNA,CHK,SINA,HLF,SLW)
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.
|ARNA||Arena Pharmaceuticals Inc||5.92||6||2.2||36.80%||Jan-13|
|CHK||Chesapeake Energy Corp||14.9||15||3.6||24.10%||Jan-13|
|SLW||Silver Wheaton Corp||25.6||26||3.9||15.20%||Jan-13|
Arena Pharmaceuticals Inc (ARNA) is currently trading at $5.92. Its 52 week range is between $1.23 and $7.02.
Chesapeake Energy Corp (CHK) is currently trading at $14.91. Its 52 week range is between $13.32 and $35.75.
SINA Corp (SINA) is currently trading at $54.74. Its 52 week range is between $46.86 and $128.17.
Herbalife Ltd (HLF) is currently trading at $45.96. Its 52 week range is $42.15 and $73.
Silver Wheaton Corp (SLW) is currently trading at $25.62. Its 52 week range is between $22.94 and $42.5.
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
- MidEast Gulf Officials Reportedly Say There'll Be "No Formal Deal" In Algiers Next Week | ZeroHedge
- It's Official: America Is Not The Greatest Country On Earth... It's 28th! | ZeroHedge
- Epsilon Theory: Essence of Decision | Financial Sense
- Why Won't the Fed Raise Rates? | Financial Sense
- Obamacare "Death Spiral" Looms As Co-Op Losses Mount | ZeroHedge
- Caught On Tape: Did The US Target Syrian Aid Convoy With Hellfire Missile? | ZeroHedge
- 2016 Debate Preparation Begins | ZeroHedge
The most relevant financial news and articles from the Internets
- How one 26-year-old banked nearly $150,000 in savings as part of a plan to... | Business Insider
- A $195 million estate once owned by William Randolph Hearst is now tied... | Business Insider
- ... | Business Insider
- America's spies have their own version of Wikipedia — here's what it... | Business Insider
- Why you should never use alcohol to help you fall asleep, according to science | Business Insider
- Save a ton at West Elm's massive fall sale — and more of today's best... | Business Insider
- 11 unlikely foods that make you feel bloated | Business Insider