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
- I'm Not Buying It - Not The Wall Street Rip, Nor The Keynesian Rap | ZeroHedge
- THAT WAS A KILL | iBankCoin.com
- STTG Market Recap Dec 18, 2014 | FundMyMutualFund
- US Oil Rig Count Tumbles Most In Over 5 Years,"Demand From Oilfield Customers Dropping Rapidly" | ZeroHedge
- Putin Defiant, Lashes Out At West, Tells Russians Economy May Stay Weak For Two Years | ZeroHedge
- "Something Changed" - Comparing E-Mini Liquidity In 2009, 2012 And Today | ZeroHedge
- Previewing 2015... And 2014, And 2013, And 2012, And 2011, And 2010 | ZeroHedge
The most relevant financial news and articles from the Internets
- Notable Mergers and Acquisitions 12/18: (PTRY... | StreetInsider.com
- The S&P Closed At 2,012 On Wednesday — Here's What Wall Street Predicted In... | Business Insider
- Johnson the wrecker as India collapse in Gabba Test | Business Insider
- Saudi Arabia Can't Afford To Have Oil Prices This Low For Very Long (USO) | Business Insider
- HP Stream 13 Notebook Review: A Super-Affordable Windows Laptop | TheStreet.com
- Juventus ease to Cagliari win | Business Insider
- Notable 52-Week... | StreetInsider.com