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
- Biotechs Battered Most In Over A Year; Bullion Bid As Stocks Skid | ZeroHedge
- Machines Shift To "Spoofing" Soybeans & OatsToday | ZeroHedge
- For Nazi Industrialists And Hitler's Banker "All Was Forgiven" | ZeroHedge
- Earnings & Events On Tap | iBankCoin.com
- Meet Skopos Financial, The New King Of Deep Subprime | ZeroHedge
- The "War On Cash" Migrates To Switzerland | ZeroHedge
- So Many NASDAQS, SO Little Time | iBankCoin.com
The most relevant financial news and articles from the Internets
- Quake deals heavy blow to Nepal's rich cultural... | Business Insider
- Apple could whiff on earnings and still beat expectations (... | Business Insider
- The Nepal earthquake death toll has risen to more than 3,600... | Business Insider
- The Best Business Schools of 2011 | BusinessWeek
- Drew Brees Tops the Power 100 in 2012 | BusinessWeek
- Britain's first HIV home-testing kit has gone on sale, and it's... | Business Insider
- Hillary Clinton's campaign says this new... | Business Insider