Covered Call Picks (FB,CHK,LVS,USO,C)
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.
|CHK||Chesapeake Energy Corp||18.2||19||1.3||7.10%||Sep-12|
|LVS||Las Vegas Sands Corp||36.4||37||1.9||5.20%||Sep-12|
|USO||United States Oil||33.4||33.5||1.6||4.90%||Sep-12|
Facebook Inc (FB) is currently trading at $26.85. Its 52 week range is between $25.52 and $45.
Chesapeake Energy Corp (CHK) is currently trading at $18.15. Its 52 week range is between $13.32 and $35.75.
Las Vegas Sands Corp (LVS) is currently trading at $36.41. Its 52 week range is between $36.08 and $62.09.
United States Oil (USO) is currently trading at $33.41. Its 52 week range is $29.02 and $42.3.
Citigroup Inc (C) is currently trading at $26.28. Its 52 week range is between $21.4 and $39.42.
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
- Gold “Extremely Rare” - All World’s Gold Fits In Average Four-Bedroom House | ZeroHedge
- Why China Will End Up Like Japan | ZeroHedge
- China Carnage Continues; Investors "Lost & Concerned" Despite PBOC Reassurance | ZeroHedge
- Are Gold Investors Finally Capitulating? | Financial Sense
- Earnings On Deck | iBankCoin.com
- Existing-Home Sales Highest in Eight Years | Financial Sense
- When Will We Ever Learn? | ZeroHedge
The most relevant financial news and articles from the Internets
- Forced to strike IS, Turkey gambles on attacking PKK | Business Insider
- How sex traffickers in Malaysia and Thailand use Facebook to lure victims | Business Insider
- The ex-CEO of Bloomberg has joined the board of a startup people are calling '... | Business Insider
- The Best Business Schools of 2011 | BusinessWeek
- An early YouTube employee just launched an app that lets you... | Business Insider
- 'Shark Tank' investor Kevin O'Leary shares the best advice he... | Business Insider
- Tom Cruise and Jimmy Fallon faced off in the most epic lip-synch battle ever | Business Insider