Covered Call Picks (GRPN,MMR,MCP,FSLR,ARNA)
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.
Groupon Inc (GRPN) is currently trading at $3.99. Its 52 week range is between $3.68 and $27.78.
McMoRan Exploration Co (MMR) is currently trading at $12.73. Its 52 week range is between $7.76 and $16.57.
Molycorp Inc (MCP) is currently trading at $9.79. Its 52 week range is between $9.4 and $42.9.
First Solar Inc (FSLR) is currently trading at $24.79. Its 52 week range is between $11.43 and $51.89.
Arena Pharmaceuticals Inc (ARNA) is currently trading at $7.6. Its 52 week range is between $1.27 and $13.5.
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
- NATO Threatens To Send In Troops After Russia Stations Ground "Battalion" In Syria | ZeroHedge
- When You Use A Smartphone In China, You Agree Not To... | ZeroHedge
- Frontrunning: October 8 | ZeroHedge
- Lawmaker Calls For Study On Links Between Pharmaceuticals And Mass Killers | ZeroHedge
- The First Crack: Deutsche Bank Preannounces Massive Loss, May Cut Dividend | ZeroHedge
- Presenting SocGen's "China Syndrome": "The Vicious Cycle Of Lower Demand, Prices And Commodity Currencies" | ZeroHedge
- Despite Surging Job Cuts, Initial Jobless Claims Tumble Back Near 42 Year Lows | ZeroHedge
The most relevant financial news and articles from the Internets
- Did US strike on Afghan clinic exceed combat authority? | Business Insider
- A glance at the Nobel Prizes in 2015 | Business Insider
- High-tech firm's plans to make drones in NY spark... | Business Insider
- Besides Lackey in Game 1, Matheny mum on rotation | Business Insider
- Federal effort to combat chronic absenteeism at schools | Business Insider
- FIFA ethics panel meets to discuss Sepp Blatter, Platini | Business Insider
- The Latest: Blatter's lawyer says procedure not followed... | Business Insider