Covered Call Picks (GMCR,JCP,DDD,KORS,HLF)
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.
Green Mountain Coffee Roasters Inc (GMCR) is currently trading at $43.28. Its 52 week range is between $17.11 and $71.15.
J C Penney Company Inc (JCP) is currently trading at $21.01. Its 52 week range is between $15.69 and $43.18.
3D Systems Corp (DDD) is currently trading at $62. Its 52 week range is between $18.93 and $71.98.
Michael Kors Holdings Ltd (KORS) is currently trading at $57.47. Its 52 week range is between $29.32 and $60.
Herbalife Ltd (HLF) is currently trading at $38.67. Its 52 week range is between $24.24 and $73.
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
- Guest Post: Understanding Why It Feels Different This Time | ZeroHedge
- S&P Retraces Half "Putin-Press-Conference" Gains | ZeroHedge
- 50% Profit Growth and Historical Realities | Financial Sense
- Inverse Momentum Monday | iBankCoin.com
- Long Crude Oil Speculative Bets Rise To All Time High | ZeroHedge
- Higher Inflation Expectations May Start With Breakfast | Financial Sense
- China Loan Creation Tumbles, Lowest Credit Growth In 20 Months | ZeroHedge
The most relevant financial news and articles from the Internets
- This Cable Channel's Newest App Will Let You Watch 15 Second TV Shows | Business Insider
- Lena Dunham Offers 'SNL' Cast Sex Advice During Opening... | Business Insider
- You No Longer Have To Be A Millionaire To Flip Houses In San Francisco | Business Insider
- Sbarro Files For Chapter 11 Bankruptcy | Business Insider
- AOL Has Deleted The Amazing Photo Of Its Digital Prophet Swinging From A Wrecking Ball | Business Insider
- Twitter Can't Stop Talking About The 'True Detective' Finale | Business Insider
- How Lego Become The World's Hottest Toy Company | Business Insider