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
- Chinese Banks And 100,000 ‘Outlets’ Selling Gold!! | ZeroHedge
- Spot The Massive Depression, And The Tiny Recovery, In This Existing Home Sales Chart | ZeroHedge
- HSBC China PMI Indicates 4th Month Of Contraction As Yuan Weakens To Fresh 16 Months Lows | ZeroHedge
- More Bubble Talk | iBankCoin.com
- China Manufacturing Output and New Orders Contract Once Again | Financial Sense
- Russia Warns West "Remove Forces"; Begins Military Exercise On Ukraine Border | ZeroHedge
- This Is The 7500 Square Foot Soho Loft That Just Sold For $27 Million | ZeroHedge
The most relevant financial news and articles from the Internets
- States Are Rolling Out An Online Sales Tax... | Business Insider
- 10 Things In Tech You Need To Know This Morning (AAPL, GOOG) | Business Insider
- Kevin Durant Makes A Preposterous 3-Pointer While Getting Fouled And Falling Into The Stands | Business Insider
- Why Justin Bieber's Instagram From Japan Offended Over A... | Business Insider
- 'The Only Thing I Know About Apple TV Is There Are Some Amazing Engineers Working On Apple... | Business Insider
- VIDEO INSIDER: Fan TV Comes To TWC — More On... | Business Insider
- Q&A: Cover's Andrew Cove On Improving The Payment... | Business Insider