Covered Call Picks (FSLR,VXX,WCRX,ANR,HNR)

covered calls beavis

Here are today's Covered Call Picks for Tuesday 06-26-2012. Some decent returns here and less than a month till expiration.

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.

Ticker Company Price Strike Bid Return Expiration Date
FSLR  First Solar Inc  14.9 15 1.2 7.70% Jul-12
VXX  iPath S&P 500 VIX ST Futures ETN  16.7 17 1.3 7.50% Jul-12
WCRX  Warner Chilcott PLC  17.7 18 1.2 6.50% Jul-12
ANR  Alpha Natural Resources Inc  7.73 8 0.5 6.20% Jul-12
HNR  Harvest Natural Resources Inc  8.95 10 0.4 3.90% Jul-12


First Solar Inc (FSLR) is currently trading at $14.89. Its 52 week range is between $11.43 and $142.22.

iPath S&P 500 VIX ST Futures ETN (VXX) is currently trading at $16.67. Its 52 week range is between $15.57 and $59.18.

Warner Chilcott PLC (WCRX) is currently trading at $17.69. Its 52 week range is between $12.9 and $24.65.

Alpha Natural Resources Inc (ANR) is currently trading at $7.73. Its 52 week range is $7.83 and $47.25.

Harvest Natural Resources Inc (HNR) is currently trading at $8.95. Its 52 week range is between $4.85 and $14.21.

MASTERY Bottom Line (Ninja Style)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.