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
- Monday Night Charts | iBankCoin.com
- Philly Fed Business Outlook: Highest Six-Month Outlook in 22 Years | Financial Sense
- Europe: Stagnation, Default, Or Devaluation | ZeroHedge
- Forensic Expert Says Foley Murder Video "May Have Been Staged" | ZeroHedge
- New Home Sales Drop To Lowest Since March As Northeast Craters; Biggest Supply Since October 2011 | ZeroHedge
- Back on the Cusp of All-Time Highs | Financial Sense
- It Begins: Council On Foreign Relations Proposes That "Central Banks Should Hand Consumers Cash Directly" | ZeroHedge
The most relevant financial news and articles from the Internets
- Here Come Durable Goods... (DIA, SPX, SPY, QQQ, TLT, IWM) | Business Insider
- Russian military sources soldiers enter Ukraine 'by... | Business Insider
- Delta Is Right on the Ex-Im Bank -- Too Bad the Tea Party Is Its Biggest Ally | TheStreet.com
- CHART: Mobile Commerce Sales Are Growing Three Times Faster Than Overall E-Commerce | Business Insider
- Apple's Recent Hiring Spree Offers A Big Hint That New Products Are On The Way... | Business Insider
- A LinkedIn Executive Shares The #1 Tip For Using The Professional Social Network | Business Insider
- Herd mentality: 'Sheepdog mystery' solved at last | Business Insider