April Stocks To Buy With Covered Calls (ROUND 2)

Includes: AXLL, BSX, GES, MMR
by: Mitchell Harris

March options expired last week and I recently wrote about 4 companies that I would like to revisit for the month of April. As always put some stop losses in, but give yourself some room. Typically I don't write for a month's time frame. I usually wait until the last week of the option month, but I want to try something new here. Take a look at the article from last week so you are familiar with what we did.

McMoran Exploration (NYSE:MMR)- This position took in 5.6% in premium but the stock never got to $14. It's currently trading at $13.40 down from the $13.79 in price. Let's grab a ridiculous 11.4% premium for April. I mean it is truly egregious but who am I to question. If you lose it at $14 your return is high and here is why. The $.77 you took in premiums for March brings your basis down to $13. Your return would be 19.4% including all gains. If you are a first timer to MMR as per this article your return would be around 16%. Not terrible.

Georgia Gulf Corp (GGC)- Fortunately the stock was called away in March and if you were in the game, you made 3.1% for the week. Well done if you were onboard. I still like it here at $34.37, so lets write the $35's of April and grab $1.50 or 4.4% premium. If you lose it you made 6.2% for the month.

Guess (NYSE:GES)-This trade was clearly a misfire. The earnings report did not bode well for the Street. If you are in the position from last week with the premium you took in, you own it at $34.84. Let's try and get out of this dog with fleas and write the April $34's and grab $.70. If you lose it at $34 your basis will be $33.94 with the dividend (it goes ex on March 26th), so it will be a virtual break even, which is ok considering we bought it much higher.

Boston Scientific (NYSE:BSX)-This trade was a tricky one. From what I can see closed exactly at $6, so I am not sure if you were called away or not. The option trader has a nickel on either side of the strike at his discretion. If it was called away congrats on the 2.7% for the week. I am assuming we can get back in at $6, if so write a straight premium play of $.32 for April $6 calls and take 5.3% for the month. If the stock is over $6 put a GTC to buy it at $6, I think it will come back to you.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.