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
- New Jobless Claims at 307K, a Bit Higher Than Expected | Financial Sense
- Canada Just "Revised" All Of Its 2014 Job Gains 35% Lower | ZeroHedge
- The Full Breakdown Of Greece's New Cabinet | ZeroHedge
- December Durable Goods: A Major Disappointment | Financial Sense
- Jim Rogers is Wrong! | ZeroHedge
- Seven Decades Of Data Prove This Is A Really Dumb Idea... (But They'll Do It Anyway) | ZeroHedge
- The Swiss Franc Will Collapse | ZeroHedge
The most relevant financial news and articles from the Internets
- Here's How Long It Takes Warren Buffett To Earn Your Salary | Business Insider
- The Best Business Schools of 2011 | BusinessWeek
- U.S. Kids Using Media Almost 8 Hours a Day - BusinessWeek | BusinessWeek
- 11 TED Talks To Get You Through Your Quarter-Life Crisis | Business Insider
- Amazon's Hit Man | BusinessWeek
- Android Game Apps Are Becoming As Profitable As Those On The iPhone (AAPL, GOOG) | Business Insider
- McDonald's Is Overhauling Customer Service | Business Insider