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
- If The Fed Is Always Wrong, How Can Its Policies Ever Be Right? | ZeroHedge
- China Dramatically Intervenes To Boost Stocks Despite Reports It Won't; US Futtures Slump On J-Hole | ZeroHedge
- The Oil Volatility Farce Continues: Oil Now Surging As OPEC Hints At "Fair Price" Talks | ZeroHedge
- Where Does the Market Go From Here? | Financial Sense
- 80 Year Old Woman Trampled To Death In Venezuela Supermarket Stampede | ZeroHedge
- Say Goodbye To Normal - We're Going Medieval | ZeroHedge
- Guest Post: Stanley Fischer Speaks - More Drivel From A Dangerous Academic Fool | ZeroHedge
The most relevant financial news and articles from the Internets
- Russia wants a piece of the possible treasure on the Nazi ghost train | Business Insider
- ICC trial of Congolese 'Terminator' warlord to start | Business Insider
- Nicki Minaj and Taylor Swift resolved their Twitter brawl onstage at the... | Business Insider
- Bomb-making materials found in second Bangkok... | Business Insider
- Nadal hopes to make new memories vs Coric as US Open... | Business Insider
- MAYO: 10 reasons Bank of America CEO should be stripped of his chairman title | Business Insider
- Nigerian official: Boko Haram trying to hit Lagos | Business Insider