Covered Call Picks (ONTY,AMRN,RIMM,CTIC,ZNGA)

Sling Blade Covered Calls

Here are today's Covered Call Picks for Thursday 12-06-2012.

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
ONTY  Oncothyreon Inc  4.13 5 1.1 25.40% January 2013
AMRN  Amarin Corporation PLC  12 12 2.1 17.20% January 2013
RIMM  Research In Motion Ltd  11.9 12 1.2 9.80% January 2013
CTIC  Cell Therapeutics Inc  1.36 1.5 0.1 9.60% January 2013
ZNGA  Zynga Inc  2.49 2.5 0.2 9.60% January 2013

Oncothyreon Inc (ONTY) is currently trading at $4.13. Its 52 week range is between $3.35 and $9.23.

Amarin Corporation PLC (AMRN) is currently trading at $11.95. Its 52 week range is between $5.99 and $15.96.

Research In Motion Ltd (RIMM) is currently trading at $11.89. Its 52 week range is between $6.22 and $17.96.

Cell Therapeutics Inc (CTIC) is currently trading at $1.36. Its 52 week range is between $1.14 and $8.25.

Zynga Inc (ZNGA) is currently trading at $2.48. Its 52 week range is between $2.09 and $15.91.

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.