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
- Saturday Cinema with Le Fly: Glenngary, Glen Ross | iBankCoin.com
- Why The Great Petrodollar Unwind Could Be $2.5 Trillion Larger Than Anyone Thinks | ZeroHedge
- America’s Ballooning Student Debt: Lessons Learned From Chile | Financial Sense
- Illinois Pays Lottery Winners In IOUs After $30K/Month Budget "Guru" Fails To Produce Deal | ZeroHedge
- Policy Confusion Reigns As China Caps Muni Debt, Uncaps Bank Debt, And Bad Loans Soar | ZeroHedge
- Black(er) Monday Looms: Dow Futures Down 220 After J-Hole Speeches & China Fold | ZeroHedge
- Despite Being A 'Pet Rock', The Premium For Physical Bullion Is Exploding | ZeroHedge
The most relevant financial news and articles from the Internets
- Initial Common Core goals unfulfilled as results trickle... | Business Insider
- South Sudan fighting persists as cease-fire approaches: UN... | Business Insider
- Kerry, Obama to raise global warming issues in Alaska | Business Insider
- Nadal hopes to make new memories vs Coric as US Open... | Business Insider
- The richest people in the world under 35 | Business Insider
- Taylor Swift takes early lead at MTV awards | Business Insider
- NYC's first fan: A ballgame with Mayor Bill de Blasio | Business Insider