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In a Covered Call strategy, an investor can write call options on the same stock that he owns, to get a better return from that stock.

The idea is to stay long on the position and generate income from the premium obtained by selling the call, especially when the stock is expected to trade in a range. If the stock has tendency for volatility, higher downside protection tends to help covered calls.

Covered Calls for the following three tech stocks have two benefits: a high annualized return of more than 20% and comparatively lower risk considering the stock's trading range of support and resistance.

1. Apple (AAPL) - Consider a September 2012 covered call with a $595 strike price, for a net debit of around $566.21. Annualized return on this trade will be 23.50%.

  • Last Price (on 7/5/2012): $609.94
  • 52-week Range: $342.50-$644.00
  • Support: $591.80; Resistance: $603.80
  • Duration: 79 days
  • Protection: 5.5%
  • Return: 5.1%
  • Losses below: $566.21
  • Risk: If AAPL trades above $629.86 at expiration of 09/22/2012, holding the stock without the call writing could have returned better profits.

2. Netflix (NFLX) - Consider a September 2012 covered call with a $70 strike price, for a net debit of around $63.50. Assigned return on expiration will be 10.3%. The annualized return is close to 47.37%.

  • Last Price (on 7/5/2012): $81.72
  • 52-week Range: $60.70-$304.79
  • Support: $65.77; Resistance: $75.91
  • Duration: 79 days
  • Protection: 11.9%
  • Return: 10.3%
  • Losses below: $63.50
  • Risk: If NFLX trades above $79.42 at expiration of 09/22/2012, holding the stock without the call writing could have returned better profits.

3. Baidu Inc. (BIDU) - A September 2012 covered call with a $110 strike price, for a net debit of around $103.60. The annualized return is close to 28.70%.

  • Last Price (on 7/5/2012): $117.21
  • 52-week Range: $100.95-$165.96
  • Support: $111.39; Resistance: $116.61
  • Duration: 79 days
  • Protection: 9.8%
  • Return: 6.4%
  • Losses below: $103.60
  • Risk: If BIDU trades above $121.80 at expiration of 09/22/2012, holding the stock without the call writing could have returned better profits.

Note: Investors must understand the risk involved with Options. There is always a higher risk of losing money compared to stocks.

Source: Covered Call Strategies For 3 Techs - Apple, Netflix And Baidu