25 Bullish Option Ideas

It’s Monday June 22, 2009 and a new option expiration is among us. With the June expiration behind us, the July options expiration is 26 days away. Today I am seeking to find the best "bang for my buck" out of the 25 stocks listed in this article. The strategy I am using is the Buy Write option strategy. To learn more about the buy/write option strategy and options in general visit my blog.

My objective for this article is to find stocks that will yield at least 8.33% (which is at least 100% annually, and using strike prices mixed with premiums from current share price - NOTE that four of these stocks did not have a current bid for the strike which would put them at least 8.33% higher, these are highlighted in the spreadsheet) assuming the stock expires above the indicated strike price at July expiration on what I call the NASDAQ 25 (25 stocks in NASDAQ with current highest market cap).

Historically the NASDAQ is up in the month of July on an average of 0.8% dating back to 1971. To get a detailed spreadsheet of NASDAQ monthly gains and understand how to easily sort by any month click here.

Also note that many of these companies are reporting earnings before options expiration, and if you buy the recent "recovery" talks it may be time to get into a buy/write option strategy. I am not indicating that I buy these talks of a recovery just yet, or believe in these so called green shoots, but if you believe we are recovering, now may be a time to get in while analyst estimates are way down for these stocks.

Below is the table of the 25 stocks listed in alphabetical order. To view a printable list in order from least to greatest % returns, and averages which show the best "bang for your buck" click here.

The table above allows you to see which stocks (out of my list of 25 chosen) have the best chanced, with most protection, yielding the highest possible returns ("best bang for your buck"). I use this method to choose which stocks I'll be buying to write out immediately.

From this table I am most interested in: Activision Blizzard (ATVI), Amazon (AMZN), Infosys Technologies (INFY), Research in Motion (RIMM), and Yahoo (YHOO), as you can see from the spreadsheet, they all have higher than average returns, downside protection, and current probabilities of expiring above indicated strike at expiration (based on 25 stocks analyzed).

I like using this strategy, because even if I'm not called out on the stock at expiration, I'll still be able to write out again at my desired strike price and date again for another premium. Check out my blog for more strategies like the ones mentioned above, options pricing, probabilities, and more.

If you liked this article, check out my other articles and or subscribe to me on Seeking Alpha.

Disclosure: Long GOOG

Comments

[LanceLink:]

I question any option-writing analysis which depends so heavily on "return if assigned." What you are saying -- I'm supposed to buy CSCO at 18.90 (or thereabouts) and write a July 21 for what, 11 cents? And CSCO is supposed to close above 21, so I make $2.10 plus 11 cents? And 11 cents is "downside protection"?

Likewise, you're suggesting that I write a YHOO July 17? When the stock is at 15.90? So I get a big 36 cents? That's "downside protection"?? That's "bang for your buck"?

You've written some interesting articles, but this one is just plain wrong.

I'll say this again -- writing options with the "hope" of being assigned at a substantially higher strike price is a losing strategy.

Jun 22 09:06 AM

[LanceLink:]

Case in point: Today's action. Cisco down .52, July 21 went from .11 to .06. No protection at all.

Stay ATM. Chasing the higher strike is just pie-in-the-sky, directional trading.

Jun 22 05:52 PM