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
- Ron Paul: Much Ado About Restrooms | ZeroHedge
- Deleveraging Cycles Can Last a Very Long Time | Financial Sense
- Is the Derivatives Market About to Implode the Big Banks Again? | ZeroHedge
- Iran's Ayatollah: "The US Can't Do A Damn Thing About Our Missile Program" | ZeroHedge
- Prescription Pain-Killers: "Far Riskier" Than Gun Ownership | ZeroHedge
- Are Investors Idiots? | ZeroHedge
- What It Takes To Be President Of The American Police State | ZeroHedge
The most relevant financial news and articles from the Internets
- Brazilians are using a demonic chant to protest their new president | Business Insider
- REMITTANCES EXPLAINED: How funds are transferred across borders, and why digital is poised... | Business Insider
- HERE IT IS: One brutal chart shows death is imminent for America's... | Business Insider
- Apple is hiring a lawyer who specializes in medical privacy, hinting at bigger health tech... | Business Insider
- Here's the standup clip that reignited the Bill Cosby rape allegations... | Business Insider
- A hacker reveals the easiest way to come up with a strong password that's easy to... | Business Insider
- A radical theory in physics could solve the mystery that Einstein... | Business Insider