Covered Call Picks (JCP,DNDN,TNA,ABX,BBRY)

Liam Neeson - The Grey (1)

A week from May Options Expiration, these covered calls can still get you a 3% gain.

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
JCP  J C Penney Company Inc  17.7 18 0.6 3.20% May 2013
DNDN  Dendreon Corp  3.98 4 0.1 3.00% May 2013
TNA  Direxion Daily Small Cap Bull 3X Shares  47.4 47.5 1.1 2.30% May 2013
ABX  Barrick Gold Corp  20.9 21 0.4 2.10% May 2013
BBRY  Research In Motion Ltd  15.5 16 0.3 1.90% May 2013

J C Penney Company Inc (JCP) is currently trading at $17.72. Its 52 week range is between $13.55 and $34.99.

Dendreon Corp (DNDN) is currently trading at $3.98. Its 52 week range is between $3.69 and $9.34.

Direxion Daily Small Cap Bull 3X Shares (TNA) is currently trading at $47.39. Its 52 week range is between $20.77 and $46.89.

Barrick Gold Corp (ABX) is currently trading at $20.88. Its 52 week range is between $17.51 and $43.3.

Research In Motion Ltd (BBRY) is currently trading at $15.54. Its 52 week range is between $6.22 and $18.32.

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.