Covered Call Picks (MCP,NFLX,FB,LCC,BBY)
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.
Molycorp Inc (MCP) is currently trading at $8.78. Its 52 week range is between $5.75 and $35.79.
Netflix Inc (NFLX) is currently trading at $103.44. Its 52 week range is between $52.81 and $133.43.
Facebook Inc (FB) is currently trading at $30.95. Its 52 week range is between $17.55 and $45.
US Airways Group Inc (LCC) is currently trading at $14.67. Its 52 week range is between $5.81 and $15.5.
Best BUY Co Inc (BBY) is currently trading at $14.48. Its 52 week range is between $11.2 and $27.95.
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
- The Urban Bubble in Commercial Real Estate | Financial Sense
- Raymond James Analyst Is Out With A Major Bearish Call | ZeroHedge
- The Best And Worst Performing Assets Since The End Of QE3 | ZeroHedge
- Deutsche Bank Rallies On Modest Debt Buyback Plan, Schaeuble Proclaims "Strong, Resilient Bank" | ZeroHedge
- Edward Altman: Risk in High Yield Market at 2007 Levels; Not Isolated to Energy | Financial Sense
- The Claws of Systemic Risk Are Popping Once Again | Financial Sense
- HSBC Cancels Pay Freeze After Two Weeks Following "Staff Revolt" | ZeroHedge
The most relevant financial news and articles from the Internets
- Hillary Clinton's campaign managed to troll Marco Rubio and Bernie Sanders... | Business Insider
- What it was like to watch the debut of Kanye West's strange, soulful new album... | Business Insider
- Japanese stocks are getting destroyed (USDJPY) | Business Insider
- Zenefits has fired execs who may have encouraged employees to skirt the law | Business Insider
- A California man used investor money to pay off his gambling debts | Business Insider
- Kanye West is still making changes to his new album on the day it's... | Business Insider
- Ted Cruz just released a Hillary Clinton attack ad that... | Business Insider