Covered Call Picks (ALXA,AMRN,CLF,ISIS,DNDN)
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.
Alexza Pharmaceuticals Inc (ALXA) is currently trading at $4.75. Its 52 week range is between $2.55 and $11.5.
Amarin Corporation PLC (AMRN) is currently trading at $10.49. Its 52 week range is between $5.99 and $15.96.
Cliffs Natural Resources Inc (CLF) is currently trading at $30.48. Its 52 week range is between $32.25 and $78.85.
Isis Pharmaceuticals Inc (ISIS) is currently trading at $8.94. Its 52 week range is between $6.43 and $15.61.
Dendreon Corp (DNDN) is currently trading at $4.33. Its 52 week range is between $3.69 and $17.04.
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
- Is Deutsche Bank Signaling A New Banking Crisis? | ZeroHedge
- Crunch Time? | ZeroHedge
- US Consumer Is the Last Defense Against Strong Dollar Drag on the Economy | Financial Sense
- Even The Fed's "Owners" Aren't Buying What Janet Is Selling | ZeroHedge
- Krinsky on Stock Market: Primary Trend Has Shifted to the Downside | Financial Sense
- The Truth About Politics | ZeroHedge
- Mainstream Media Guide To Obama's Economic "Recovery" | ZeroHedge
The most relevant financial news and articles from the Internets
- Donald Trump: Here's the one area where Bernie Sanders and I agree | Business Insider
- A young couple may have gotten an advance clue... | Business Insider
- Donald Trump mocks Jeb Bush for asking his 'mommy' to campaign with him | Business Insider
- This botched intro was the most entertaining moment of the GOP debate | Business Insider
- Here's what publishers are doing to keep up with... | Business Insider
- These are the hedge fund strategies everyone wants in on | Business Insider
- How an Apple employee once stood up to Steve Jobs — and got promoted... | Business Insider