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
- Draghi Dud: Investor Confidence Collapses As PMIs Plunge Across EU | ZeroHedge
- It's The Entrepreneur That Saves An Economy – Not The Fed | ZeroHedge
- How Did Picasso Create 50,000 Works of Art? | Altucher Confidential
- Saudi Arabia Forces The UN To Drop Humanitarian Inquiry Into Yemen Atrocities | ZeroHedge
- Bulls Beware: Days After Calling For Bear Market, Gartman Declares The "Bearish Run In Global Stocks Is Over" | ZeroHedge
- World's Largest Shipowners To Abandon Greece Ahead Of Major Tax Hike | ZeroHedge
- Russia Claims ISIS Now On The Ropes As Fighters Desert After 60 Airstrikes In 72 Hours | ZeroHedge
The most relevant financial news and articles from the Internets
- Greinke, Dodgers top Padres 2-1 to clinch home field in... | Business Insider
- US, states finalize settlement with BP over gulf oil spill... | Business Insider
- The Latest: Rainfall sets new record in South Carolina | Business Insider
- Turkish jets intercept Russian... | Business Insider
- Jennings' 51-yard TD helps Giants seal 24-10 win... | Business Insider
- This email rant just cost a male Girls in Tech employee his job | Business Insider
- Foley destroys England's World Cup hopes | Business Insider