Covered Call Ideas:
The purpose of covered calls is to slowly collect income on stocks by lowering one’s average cost. It is a good way to put on a bullish bet while minimizing your risk. While it does limit your potential reward, this tool can come in handy for those wanting to invest in a stock but on a pullback rather than at current prices. The names each month will most likely change. However, should I be forced to hold onto the stock past expiration because the covered call expired OTM, I would be comfortable doing so. In turn, I am only choosing names I feel confident about long-term. While there are many names with very attractive premium selling opportunities, especially high-beta tech names, most I would not be comfortable holding long-term as I think valuations are stretched. Below are 5 covered call trades that I like for the next month.
"Now on to business news. Doug how was the stock market today. "
"Well Linda Stocks closed higher today".
Bottom line? Stocks were higher at the end of the day. Period. Dot. End of Sentence. Conclusion. The End. Nothing More, Nothing Less. Got it?
#Greebola was in its glory today, showing just why the headlines may melt away but record high stock prices are here to stay. #Greebola - The last big $SPY recovery off the lows??? The Ebola crisis.
Today's highly anticipated trading session was able to capture the entire trading year of 2015 in one day. The S&P500 ETF $SPY closed the session at the exact price it started the day at.
The FED moved the needle up a little, but even they were powerless to fight the magnet that is 2015. Prices can never break too high or too low in 2015. The action can never get too hot or too cold. The irony is most thought 2015 would continue the theme of everything going up and/or everything going down. 2015 has brought back the stock picker. There is one way to beat a consolidating market... its to be in the names that move. How about that $AMED! While the market has been gyrating in a narrow contained range, there have been a host of stocks breaking higher/lower.
Let's look at some stocks, ETF's, the VIX, some scans, and what I think is going to happen in the weeks ahead.
The VIX was taken down today, and this is what I see from a chart perspective:
Amid this historic bull market lies many parabolic moves. Stocks that are up 10-20 fold since the financial crisis. Wynn Resorts is such a stock. It was trading for $10.22 in March of 2009. Five years later the stock changed hands for over $240 share. The stock has since crumbled to a recent $102 a share price. Still a significant gain from $10 but more than 50% off its record highs. As I've noted numerous times via live audio in the chat room at optionmillionaires.com , Wynn will already be in rally mode well before the herd joins the recovery.
Looking at a longer term perspective of the stock, it's more oversold than it was back in 2009 at $10. That turned out to be an incredible buying opportunity.