Covered Call Picks (ZNGA,VHC,NFLX,CRUS,RVBD)
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.
|VHC||VirnetX Holding Corp||35.3||36||3||8.50%||Aug-12|
|CRUS||Cirrus Logic Inc||27.6||28||2.1||7.60%||Aug-12|
|RVBD||Riverbed Technology Inc||15.3||16||1.1||7.30%||Aug-12|
Zynga Inc (ZNGA) is currently trading at $4.8. Its 52 week range is between $4.45 and $15.91.
VirnetX Holding Corp (VHC) is currently trading at $35.25. Its 52 week range is between $11.01 and $41.93.
Netflix Inc (NFLX) is currently trading at $81.82. Its 52 week range is between $60.7 and $285.5.
Cirrus Logic Inc (CRUS) is currently trading at $27.6. Its 52 week range is $12.52 and $31.23.
Riverbed Technology Inc (RVBD) is currently trading at $15.29. Its 52 week range is between $13.3 and $32.67.
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
- These Four Currency Pegs Are Most Likely To Fall | ZeroHedge
- Traders Are Panic-Buying Colombian Pesos | ZeroHedge
- Margin Calls Mount On Loans Against Stock Portfolios Used To Buy Homes, Boats, "Pretty Much Everything" | ZeroHedge
- Pennsylvania Schools Start New Year Broke With "Minus $1 Billion" In Funding | ZeroHedge
- Caught On Tape - Chinese Investors This Week | ZeroHedge
- THe EMPReSS MoNeY PRiNTeR... | ZeroHedge
- The Great Unwind, China Begins Dumping Treasuries | ZeroHedge
The most relevant financial news and articles from the Internets
- Study can't confirm results of many psychology... | Business Insider
- Lebanon interior minister calls for restraint in protests... | Business Insider
- Here are some of Apple's most playful event invitations over the years | Business Insider
- Spain officials dismiss 'gag-law' fine for woman... | Business Insider
- China fears keep markets on edge as stocks rally | Business Insider
- Lawyer: Former franchisee alerted Subway about Fogle | Business Insider
- King Bolt shows Gatlin who's boss | Business Insider