Biotech Covered Call Picks (AMRN,VVUS,DNDN,ARNA,SPPI)
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.
Amarin Corporation PLC (AMRN) is currently trading at $15.12. Its 52 week range is between $5.99 and $15.6.
Vivus Inc (VVUS) is currently trading at $28.51. Its 52 week range is between $6.13 and $29.99.
Dendreon Corp (DNDN) is currently trading at $6.99. Its 52 week range is between $5.69 and $40.97.
Arena Pharmaceuticals Inc (ARNA) is currently trading at $11.12. Its 52 week range is $1.23 and $13.5.
Spectrum Pharmaceuticals Inc (SPPI) is currently trading at $16.94. Its 52 week range is between $6.94 and $16.98.
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
- It’s Official: Gold Is Now The Most Hated Asset Class | ZeroHedge
- Why Japan Is Bad For The World | ZeroHedge
- Visualizing The Silver Squeeze | ZeroHedge
- Deepwater Resolution | iBankCoin.com
- North Korea Launches Three Missiles Into Eastern Sea | ZeroHedge
- Class of 2013: The Most Indebted Ever | ZeroHedge
- Lame Duck President Good for the Markets | Financial Sense
The most relevant financial news and articles from the Internets
- How One Overworked IRS Worker Ignited The Tea-Party Targeting Scandal | Business Insider
- How An Accident Turned A CNet Editor Into BlackBerry Z10 Fan (BBRY) | Business Insider
- Laptop Computer Reviews - BusinessWeek | BusinessWeek
- The Most Incorrect Prediction Of The Past 5 Years | Business Insider
- Abe's Master Plan | Business Insider
- 9 Formulas Must Master To Pass The CFA Exams | Business Insider
- The Astros Lost A Game In Maybe The Worst Way Possible | Business Insider