Last Week In July For Option Trades - Covered Call Trades That Will Heat Up The Portfolio

Includes: CAR, FITB, MCPIQ
by: Mitchell Harris

I will keep this short and sweet, so you can make some money in short order. I have chosen some names in sectors that are under the radar and have been a little beaten up. I tend to like the stocks that are close to or at a strike price, for these trades. The other side of the trade is finding a few stocks that stay in a $2-$3 rangle so your risk is minimized. Good luck and email me with questions.


(MCP)--Molycorp, you know the rare earth elements company that basically controls the market on this type of geology. China's stranglehold on the industry only helps them in years to come. The stock has gotten a little beaten up and is sitting nicely just below $20 at $19.75. This is around 75 cents off the 52 week low. Some of my followers have made some nice money on Molycorp over the past 6 months. Lately it has been hovering in the $19-$22 range, so in my opinion a lot of money can be made in this range. The July 20 calls are paying 2% and with the extra $.25 profit on the call away your weekly gain is 3%. Take it and run, if you don't lose it then the August 20 calls are paying $1.25. For all of you volatility fans out there, the % is 54.94, so keep that in mind.


(NASDAQ:CAR)--Avis Rent a Car is also sitting below a strike price. While not as rich as Molycorp it still has a 2% return on a straight premium play. Grab $.28 for the $15 strike and enjoy around a 2% return for the week. The stock has been meandering around $15 so if you don't lose it, August will pay you $1 but let's discuss that on Friday. I like the fact they have $600mm in cash and 97% of the stock is held by institutions. The implied volatility is 41.20%, with the stock ranging between $14.50 and $16.00, which puts it in the attractive category for a month on month write strategy.


(NASDAQ:FITB)--Fifth Third Bank, the 1300 branch Midwest banking concern is trading around $13.70. The July $14 calls are paying roughly 1.2% but you can possibly get an extra $.30 with good earnings coming up. That will ratchet up the return to 3.3% which is great. August will pay you handsomely as well, and most likely the stock will not get to $14, so treat this as a possible 2 month trade. The stock is $1 from its 52 week high with a 9 P/E ratio. They report earnings on the 19th, and last quarter's numbers were very good. With a 2.3% dividend added on maybe it would not be the worst thing in the world to play this one for awhile. Implied volatility is 45%, and I have stayed away from this stock until the USA banking sector made a recovery of sorts. Their statistics are getting better, as they now boast $4B in cash as well as a 38% operating margin.

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

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