Covered Call Picks (UNXL,ACI,IOC,ARNA,CLF)

Make Fat Stacks with Covered Calls

Here are today's Covered Call Picks for Monday 04-22-2013.

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
UNXL  UniPixel Inc  35.7 36 3.7 10.40% May 2013
ACI  Arch Coal Inc  4.89 5 0.3 6.30% May 2013
IOC  InterOil Corp  77 77.5 4.8 6.20% May 2013
ARNA  Arena Pharmaceuticals Inc  7.95 8 0.5 6.20% May 2013
CLF  Cliffs Natural Resources Inc  17.7 18 1 5.80% May 2013

UniPixel Inc (UNXL) is currently trading at $35.67. Its 52 week range is between $5.15 and $41.42.

Arch Coal Inc (ACI) is currently trading at $4.89. Its 52 week range is between $4.47 and $10.26.

InterOil Corp (IOC) is currently trading at $76.99. Its 52 week range is between $47.33 and $99.05.

Arena Pharmaceuticals Inc (ARNA) is currently trading at $7.97. Its 52 week range is between $2 and $13.5.

Cliffs Natural Resources Inc (CLF) is currently trading at $17.65. Its 52 week range is between $16.96 and $69.5.

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.