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
- The SHOCKING Inside Scoop On Being a Guest Writer At Zero Hedge | ZeroHedge
- Visualizing China's Rising Dominance In Trade (In 4 Shocking Maps) | ZeroHedge
- Uncertain Global Growth and Policy Environment | Financial Sense
- US Treasury Gives Explicit Warning To China, Germany And Japan Not To Devalue Their Currencies | ZeroHedge
- Doha Meeting Reveals OPEC’s Inability to Control Global Oil Prices | Financial Sense
- The Oligarchy Is Tottering - Trump Tramples The Neocons' "False Song Of Globalism" | ZeroHedge
- Consumer "Hope" Slumps As Inflation Expectations Hit Record Lows | ZeroHedge
The most relevant financial news and articles from the Internets
- An octopus rolled up inside a broken coconut and zoomed around the ocean floor for a... | Business Insider
- 18 of the most bizarre fast-food items ever created | Business Insider
- How retailers and tech giants are pushing... | Business Insider
- Millennials are leaving these 10 big American cities in droves... | Business Insider
- This small British sports car maker is absolutely obsessed with making its cars lighter | Business Insider
- Yale will keep the name of a fervent advocate of slavery on one of its... | Business Insider
- NASA is looking for ways to dispose of dead bodies in space — and it's... | Business Insider