Covered Call Picks (GRPN,MMR,MCP,FSLR,ARNA)
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.
Groupon Inc (GRPN) is currently trading at $3.99. Its 52 week range is between $3.68 and $27.78.
McMoRan Exploration Co (MMR) is currently trading at $12.73. Its 52 week range is between $7.76 and $16.57.
Molycorp Inc (MCP) is currently trading at $9.79. Its 52 week range is between $9.4 and $42.9.
First Solar Inc (FSLR) is currently trading at $24.79. Its 52 week range is between $11.43 and $51.89.
Arena Pharmaceuticals Inc (ARNA) is currently trading at $7.6. Its 52 week range is between $1.27 and $13.5.
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
- Is the Market Due for Another 10% Correction? | Financial Sense
- The Ten Plagues That Are Hitting America Right Now | ZeroHedge
- Europe Unveils Preliminary Sanctions Against Russia | ZeroHedge
- Europe's Proposed Russian Sanctions Leaked: Full Report | ZeroHedge
- Economic Laws Are Not Optional | ZeroHedge
- Weekend Top 100 | iBankCoin.com
- Weekly Scorecard | iBankCoin.com
The most relevant financial news and articles from the Internets
- What It's Like To Be Part Of New York's Most Renowned Public... | Business Insider
- The Story Behind Sarepta's Firing of Its Top Scientist | TheStreet.com
- BOEHNER: I Won't Give Obama 'Blank Check' To Fix... | Business Insider
- A Google Executive Reveals Why The Company Came Up With Its Beautiful New Android Design... | Business Insider
- Why Birds Fly In A V-Formation | Business Insider
- Why One Of The Most Respected Political Analysts Thinks Hillary Might... | Business Insider
- ... | StreetInsider.com