Covered Call Picks (GMCR,KERX,HLF,KORS,NFLX)
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 $48.94. Its 52 week range is between $17.11 and $71.15.
Keryx Biopharmaceuticals Inc (KERX) is currently trading at $6.73. Its 52 week range is between $1.28 and $9.98.
Herbalife Ltd (HLF) is currently trading at $35.79. Its 52 week range is between $24.24 and $73.
Michael Kors Holdings Ltd (KORS) is currently trading at $55.87. Its 52 week range is between $31.75 and $60.
Netflix Inc (NFLX) is currently trading at $184.41. Its 52 week range is between $52.81 and $177.89.
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
- Forget Ebola, Florida Issues "Flesh-Eating Bacteria" Public Health Warning | ZeroHedge
- Fly Buy: $ZPIN | iBankCoin.com
- FOMC Preview: Dashboards, Dissent, & "Degree-Of-Accommodation" Differences | ZeroHedge
- Foreign Secretary Warns Russian Sanctions "Will Hit UK Economy" | ZeroHedge
- Consumer Confidence Explodes Higher To October 2007 Highs | ZeroHedge
- Will Argentina’s Debt Crisis Rock the Global Markets? | Financial Sense
- A Look Inside The World's Largest Naval Exercise | ZeroHedge
The most relevant financial news and articles from the Internets
- Drew Brees Tops the Power 100 in 2012 | BusinessWeek
- These High-Tech Contacts Could Change Healthcare | Business Insider
- The NFL's Drug Testing Policy Is Completely Ridiculous | Business Insider
- Three Big Economic Events Are Coming Up (DIA, SPY, SPX, QQQ) | Business Insider
- Argentina Finally Makes An Offer Worth Listening To | Business Insider
- Earth Spent Its First Billion Years Being Pummeled By Asteroids | Business Insider
- ... | StreetInsider.com