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
- Japanese Exports Tumble For 2nd Month In A Row, Worst Since Abenomics Began | ZeroHedge
- Conference Board Leading Economic Index Continues to Expand | Financial Sense
- Japanese Inflation Holds Near 23 Year Highs As Food, Energy, & TV Costs Soar | ZeroHedge
- DOE, Intel Work to Keep ‘Moore’s Law’ From Expiring | Financial Sense
- ‘Apocalypse’ Krugman Ignores History, Keynes And Lenin’s Warnings | ZeroHedge
- Steve "Debt-Is-Good" Liesman Meets Barack "Hope-Is-Better" Obama - Live Feed | ZeroHedge
- First Syrian Rebels, Now Hamas: Qatar Once Again Emerges As "Mystery" US-Backed Sponsor Of War | ZeroHedge
The most relevant financial news and articles from the Internets
- Judge 'Gives Girls Gone Wild' Founder $5,000 Daily Fine... | Business Insider
- 3 Stocks Rising on Unusual Volume | TheStreet.com
- Experts Break Down The Two Plane Crashes In Bad Weather That Happened In The Last 24 Hours | Business Insider
- Here's Why PTSD Is No Excuse For Sen. John Walsh's Plagiarizing... | Business Insider
- FAA LIFTS BAN ON FLIGHTS TO ISRAEL | Business Insider
- Facebook Has Major Opportunities To Grow Around The World | Business Insider
- You Might Think A Fox-Time Warner Deal Just Isn't Going To Happen... | Business Insider