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
- Where Are We Now? And What Does It Mean For The Fed | ZeroHedge
- Socialist On The Line Caption Contest | ZeroHedge
- HUGELY BULLISH ON THIS | iBankCoin.com
- No More "Considerable Time" - Meet The New, "Patient" Fed | ZeroHedge
- Draghi Risks Becoming the Boy Who Cried Wolf Over QE | Financial Sense
- Wall Street Harbinger Jefferies Reports Q4 Bloodbath: 73% Plunge In Fixed Income Revenue, 45% Drop In Equities | ZeroHedge
- Maybe Everything's Not "Fixed" - S&P Loses 2,000 Level As Kuwait Spoils The Party | ZeroHedge
The most relevant financial news and articles from the Internets
- OIL IS SURGING (USO) | Business Insider
- Notable Mergers and Acquisitions 12/17: (PHG) (FDX... | StreetInsider.com
- General Mills Unveils 50 Snack Products, Just in Time for Earnings | TheStreet.com
- Google Is In Danger Of Letting Facebook Steal The... | Business Insider
- Lego Is for Girls | BusinessWeek
- Here's How Much Each Ivy League University President Makes In A Year | Business Insider
- Oil prices sink further in Asian trade | Business Insider