Covered Call Picks (LNKD,WLT,LCC,NOK,VVUS)

Sling Blade Covered Calls

Here are today's Covered Call Picks for Tuesday 05-29-2012.

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.

Ticker Company Price Strike Bid Return Expiration Date
LNKD  LinkedIn Corp  99.9 100 5 5.00% Jun-12
WLT  Walter Energy Inc  51.4 52.5 2.4 4.70% Jun-12
LCC  US Airways Group Inc  12.6 13 0.6 4.60% Jun-12
NOK  Nokia ADR representing one Ord Shs Series A  2.95 3 0.1 4.40% Jun-12
VVUS  Vivus Inc  24.9 25 1.1 4.20% Jun-12

LinkedIn Corp (LNKD) is currently trading at $99.94. Its 52 week range is between $55.98 and $120.63.

Walter Energy Inc (WLT) is currently trading at $51.4. Its 52 week range is between $47.42 and $132.38.

US Airways Group Inc (LCC) is currently trading at $12.62. Its 52 week range is between $3.96 and $12.4.

Nokia ADR representing one Ord Shs Series A (NOK) is currently trading at $2.95. Its 52 week range is $2.68 and $8.22.

Vivus Inc (VVUS) is currently trading at $24.89. Its 52 week range is between $6.13 and $26.75.

MASTERY Bottom Line (Ninja Style)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.