Covered Call Picks (DVAX,CSCO,FB,NFLX,FSLR)
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.
|DVAX||Dynavax Technologies Corp||4.74||5||0.5||10.50%||November 2012|
|CSCO||Cisco Systems Inc||16.9||17||0.5||2.80%||November 2012|
|FB||Facebook Inc||19.9||20||0.6||2.80%||November 2012|
|NFLX||Netflix Inc||79.6||80||1.8||2.30%||November 2012|
|FSLR||First Solar Inc||24.4||24.5||0.5||2.20%||November 2012|
Dynavax Technologies Corp (DVAX) is currently trading at $4.74. Its 52 week range is between $2.67 and $5.34.
Cisco Systems Inc (CSCO) is currently trading at $16.85. Its 52 week range is between $14.96 and $21.3.
Facebook Inc (FB) is currently trading at $19.86. Its 52 week range is between $17.55 and $45.
Netflix Inc (NFLX) is currently trading at $79.61. Its 52 week range is between $52.81 and $133.43.
First Solar Inc (FSLR) is currently trading at $24.4. Its 52 week range is between $11.43 and $51.89.
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
- OPEC's Next Meeting Is Nearly Upon Us... | ZeroHedge
- Don Coxe: Bull Market in Bonds Now Ending - Risks Ahead | Financial Sense
- GDP Seasonal Adjustment: There’s No Smoking Gun | Financial Sense
- The Fed's Perilous "Fake It Till You Make It" Strategy May Be Coming Home To Roost | ZeroHedge
- What Exactly Is Going On At Lake Mead? | ZeroHedge
- Bernanke Says "No Large Mispricings In US Securities"; These 5 Charts Say Otherwise | ZeroHedge
- Mario Draghi's Slippery Downward Slope | ZeroHedge
The most relevant financial news and articles from the Internets
- Deal reached to end crippling Nigeria fuel crisis | Business Insider
- Everything we know about Google's next massive Android update (GOOG) | Business Insider
- A quirky Danish home store just made a splash in New York City — here are 12 of... | Business Insider
- The incredible story of how David Letterman saved Conan O... | Business Insider
- Afghan weddings: bigger, fatter and hard to tame | Business Insider
- Amazon's Hit Man | BusinessWeek
- Suze Orman, Debit-Card Dealer | BusinessWeek