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
- Scotland Is Building the World’s Largest Tidal Array | Financial Sense
- Saudi King Warns ISIS "Will Reach Europe In One Month, US In Two" | ZeroHedge
- To Everyone Saying Russia Is "Isolated", Here's A Map | ZeroHedge
- STTG Market Recap August 29, 2014 | FundMyMutualFund
- The Great Deformation | ZeroHedge
- Iraq and Syria Follow Lebanon’s Precedent | Financial Sense
- The Real Cost Of War | ZeroHedge
The most relevant financial news and articles from the Internets
- Sharks off the menu and on the tourist trail in Palau | Business Insider
- Mexico investigates huge fish kill in lagoon | Business Insider
- Japanese Porn Queens Raise Thousands Of Dollars For Aids... | Business Insider
- MORGAN STANLEY: The Market Could Rally For Years, And The S&P Might Go To 3,000 (SPY) | Business Insider
- Your Gym Is Ripping You Off — Here's How To Get A Cheaper Membership | Business Insider
- Which Is America's Best City? | BusinessWeek
- Mugabe says 'friendly' China vows to help... | Business Insider