Covered Call Picks (RIMM,ARNA,VRTX,LULU,LNG)
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.
|RIMM||Research In Motion Ltd||7.39||8||1.5||20.20%||Aug-12|
|ARNA||Arena Pharmaceuticals Inc||9.98||10||2||19.50%||Aug-12|
|VRTX||Vertex Pharmaceuticals Inc||55.9||57.5||7.2||12.90%||Aug-12|
|LULU||lululemon Athletica Inc||59.6||60||6.3||10.50%||Aug-12|
|LNG||Cheniere Energy Inc||14.7||15||1.4||9.20%||Aug-12|
Research In Motion Ltd (RIMM) is currently trading at $7.49. Its 52 week range is between $7.34 and $33.54.
Arena Pharmaceuticals Inc (ARNA) is currently trading at $9.95. Its 52 week range is between $1.23 and $13.5.
Vertex Pharmaceuticals Inc (VRTX) is currently trading at $55.56. Its 52 week range is between $26.5 and $66.1.
lululemon Athletica Inc (LULU) is currently trading at $58.1. Its 52 week range is $41.7 and $81.09.
Cheniere Energy Inc (LNG) is currently trading at $14.8. Its 52 week range is between $3.17 and $18.92.
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
- STTG Market Recap August 28, 2014 | FundMyMutualFund
- Iraq and Syria Follow Lebanon’s Precedent | Financial Sense
- "Markets In Turmoil" S&P 500 Loses 'Crucial' 2,000 Level As Bond Yields Slump | ZeroHedge
- Unsuspecting Winners | iBankCoin.com
- New Technology Could End the Debate Over Pipeline Safety | Financial Sense
- Government To Regulate Groundwater For 1st Time As California Drought Becomes "Race To The Bottom" | ZeroHedge
- A Look at the Coming 30-Year Inflation Cycle | Financial Sense
The most relevant financial news and articles from the Internets
- THE E-COMMERCE DEMOGRAPHICS REPORT: Men Turn Out To Be The Real Mobile Power... | Business Insider
- Abercrombie & Fitch's Sales Decline Is Hammering the Stock | TheStreet.com
- What It’s Like To Witness An Execution | Business Insider
- Janet Yellen Owns A Very Expensive Collection Of Stamps (DIA, SPY, QQQ, TLT, IWM) | Business Insider
- Sri Lanka overpower Pakistan to win ODI series | Business Insider
- New York City's 2-Bedroom, 22-Person Apartment Is Your Worst Nightmare | Business Insider
- Market Wrap... | StreetInsider.com