Covered Call Picks (FSLR,URI,MS,GRPN,SPPI)
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||15||15||1.7||11.00%||Jul-12|
|URI||United Rentals Inc||32.3||33||2.6||8.00%||Jul-12|
|SPPI||Spectrum Pharmaceuticals Inc||11.7||12||0.8||6.40%||Jul-12|
First Solar Inc (FSLR) is currently trading at $14.95. Its 52 week range is between $11.43 and $142.22.
United Rentals Inc (URI) is currently trading at $32.3. Its 52 week range is between $12.81 and $47.98.
Morgan Stanley (MS) is currently trading at $13.93. Its 52 week range is between $11.58 and $24.46.
Groupon Inc (GRPN) is currently trading at $9.95. Its 52 week range is $8.8 and $31.14.
Spectrum Pharmaceuticals Inc (SPPI) is currently trading at $11.72. Its 52 week range is between $6.94 and $16.
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
- Oil's Latest Casualty: Saudi Binladin Group Fires 50,000, A Quarter Of Its Workforce | ZeroHedge
- The Woodstock Of Crony Capitalism | ZeroHedge
- Is Wall Street Cyber Secure? | Financial Sense
- Gold And Negative Interest Rates | ZeroHedge
- Warning: Hawkishness Ahead | Financial Sense
- Money Is Energy: George Mobus Discusses Biophysical Economics and Alternative Theories of Value | Financial Sense
- US Treasury Gives Explicit Warning To China, Germany And Japan Not To Devalue Their Currencies | ZeroHedge
The most relevant financial news and articles from the Internets
- It looks like 2010 all... | Business Insider
- Facebook or Google? Here's the difference between working at 2 of the best... | Business Insider
- Lego Is for Girls | BusinessWeek
- The Best Business Schools of 2011 | BusinessWeek
- Doctors may soon have to take training... | Business Insider
- How to make a mint julep | Business Insider
- Germany doesn't want Europe's... | Business Insider