Covered Call Picks (URI,LCC,GMCR,MU,STX)
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.
|URI||United Rentals Inc||34.8||35||2.4||6.80%||Jul-12|
|LCC||US Airways Group Inc||12.5||13||0.8||6.70%||Jul-12|
|GMCR||Green Mountain Coffee Roasters Inc||20.7||21||1.3||6.40%||Jul-12|
|MU||Micron Technology Inc||5.94||6||0.4||6.10%||Jul-12|
United Rentals Inc (URI) is currently trading at $34.79. Its 52 week range is between $12.81 and $47.98.
US Airways Group Inc (LCC) is currently trading at $12.5. Its 52 week range is between $3.96 and $13.36.
Green Mountain Coffee Roasters Inc (GMCR) is currently trading at $20.7. Its 52 week range is between $19.45 and $115.98.
Micron Technology Inc (MU) is currently trading at $5.94. Its 52 week range is $3.97 and $9.16.
Seagate Technology (STX) is currently trading at $23.84. Its 52 week range is between $9.05 and $32.55.
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
- Frontrunning: November 27 | ZeroHedge
- Kurt Kallaus: Still No Recession; Expect Mild Acceleration in 2016 | Financial Sense
- Martin Shkreli Sets Out To Crush KaloBios Shorts: Will Stop Lending Out Shares | ZeroHedge
- Buy! And Hold? | ZeroHedge
- Taxation As A Severe Insult | ZeroHedge
- Richard Russell: The Passing of an Icon | Financial Sense
- Schengen Is Cracking – Can the EU Withstand the Pressure? | Financial Sense
The most relevant financial news and articles from the Internets
- UN: 2 killed in border town between South Sudan and Sudan... | Business Insider
- Brothers-in-arms for Britain against Belgium | Business Insider
- Thai poultry producers accused of labor abuses | Business Insider
- 25 Ways to Make LinkedIn Work for You | BusinessWeek
- Cameron: UK must attack IS in Syria to deny group safe... | Business Insider
- Chip Kelly was supposed to be a revolutionary football genius, but now it looks like... | Business Insider
- White House undergoes holiday lockdown after man jumps... | Business Insider