Covered Call Weekly 9/12/07

Buy 100 shares of Motorola (MOT) at 17.31 for $1731. Sell a Covered Call, the October Call at 18, for $0.40 per share for $40. Short term return is 2.3%. 
If the covered call is excercised at 18, then the total short term return is $40 plus $69 equals $109, or a 6.3% return.

This is an educational series to show the income generating potential of Covered Call Writing. Please do not take this as financial advice. Options involve an increased risk of losing money than owning stock. Appropriate research about options is advised.

Ideal Strategy for Covered Calls

Buy a stock on a dip. Let the stock recover, and then sell a covered call.

Covered Call Weekly 8/26/2007

Buy 100 shares of Motorola (MOT) at 30.97 for $3097.
Sell the September 2007 Call at 30 at 1.60 for $160.
One month return is 5.16%.

Covered Call Weekly 8/26/2007

Buy 100 shares of CV Therapeutics (CVTX) at 10.05 for $1005
Sell September 2007 Call at 10 for 1.25 for $125
One Month Return = 12.4%

Covered Call Weekly 8/20/07

Buy 100 shares of Nokia (NOK) at 29.65 for $2965
Sell one Nokia 30 call for August 2007 at 1.05 for $105.
One month return of 3.5%.

Covered Call Weekly

Buy 100 shares of Nokia (NOK) at 29.37 at 2937.
Sell 1 September 07 contract for 100.
Return 3.4%.

Covered Call Weekly

MOT 100 shares at 16.84.
Sell September Call at 17 for 0.55
3.26% return

Covered Call Weekly 8/05/07

100 Shares of Texas Instruments (TXN) at 33.74
Sell September Call at 35 for 1.09
Total Profit if price reaches 35 is $225 in one month on a $3374 initial investment. This is a 6.6% return.

Covered Call Weekly 7/29/2007

Buy 100 shares of Motorola (MOT) at 16.95.
Sell 1 Aug 2007 Call Contract at 17 for 0.70.

Covered Call Weekly 7/23/07

Buy 100 shares of Apple (AAPL) at 143.70 for $14,370
Sell 1 August 150 call at 5.80 for $580

Covered Call Weekly 7/21/2007

Buy 100 Shares of Motorola (MOT) at 17.95.
Sell one contract for an August 2007 call option at 18 for 0.55.

Covered Calls To Protect Against Losses

Covered calls can be used to protect against potential losses in equity value. For example, New York Stock Exchange Group (NYX) is currently trading around $72, yet the option to buy 100 shares at $75 is available for $3.20 per share. Not only can this generate $320 for the month, it also provides $320 of protection in the event NYX shares decline.