Energy Covered Call Picks (KOG,MMR,ANR,BTU,CHK)
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.
Kodiak Oil & Gas Corp (KOG) is currently trading at $8.87. Its 52 week range is between $3.59 and $10.9.
McMoRan Exploration Co (MMR) is currently trading at $13.16. Its 52 week range is between $7.76 and $16.57.
Alpha Natural Resources Inc (ANR) is currently trading at $7.12. Its 52 week range is between $5.75 and $35.15.
Peabody Energy Corp (BTU) is currently trading at $22.96. Its 52 week range is $18.78 and $50.24.
Chesapeake Energy Corp (CHK) is currently trading at $19.06. Its 52 week range is between $13.32 and $33.87.
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
- Are We Being Forced Into A "Second American Civil War"… If So, Who Will Win? | ZeroHedge
- China's 1929 Moment | ZeroHedge
- The Hunt For a Big Winner | iBankCoin.com
- Chinese Farmer Loses Life Savings | Financial Sense
- Obama Authorizes "Defensive" Airstrikes Against Assad Regime In Syria | ZeroHedge
- Citadel Barred From Trading In China After Regulator Accuses "Automated Trading" Unit Of Manipulation | ZeroHedge
- Welcome To Planet Obama | ZeroHedge
The most relevant financial news and articles from the Internets
- Kerry: 'no question' that Iran deal will make... | Business Insider
- Commerzbank says profits almost triple to 280 million... | Business Insider
- ... | StreetInsider.com
- Mourinho seethes as Arsenal land Wembley blow | Business Insider
- 5 things the most successful executives never do | Business Insider
- US-led warplanes are going after ISIS' most devastating weapon | Business Insider
- Tom Cruise held his breath for 6 minutes in this... | Business Insider