Good Stocks for Covered Call Writing
This is a fantastic question. (Yes, even blue chip stocks can decline in value, so this is a legitimate concern.)
And yet unfortunately it is a question I cannot answer definitively here on this blog. Here’s why…
The best stocks for covered call writing are always changing. They are not the same from month to month. So I can’t say, “Go write covered calls on RIMM” — and expect that advice to still be good even four weeks from now.
The better question is, “What kinds of stocks are best for executing a covered call writing strategy?”
Answer: The best kind of stocks for writing covered calls are either channeling or appreciating — moving sideways or going up in price.
If a stock is channeling, chances are you will be able to collect a premium and keep your stock.
Better yet, if a stock is appreciating, you will be able to collect a premium and sell your stock at a profit so that you’re in a no-risk all-cash position until the next time you write a covered call.
Obviously, it is harder to find such stocks in a market when most prices are falling. In some ways, it’s like trying to find a needle in a haystack.
It is always easier to find good covered call candidates in a bull market than a bear market. And yet even in a bear market there are still good stocks that are “ripe” for using this strategy.
This is one reason I have developed the Black Box Easy Money System (which is about to be released on Thursday, January 29). It is a tool that automatically generates a list of potential covered call writing candidates every single month.
Furthermore, it tells you:
- Which stock to buy
- Which call option to sell
- Which put to buy (as insurance)
- % Return if exercised
- Break even return %
- Maximum dollar risk
- Maximum percentage risk
This way, you can scan the list of potential covered call writing candidates once a month and quickly make a good decision.
To show you how this process works, I’ve created a series of free videos. And I’ve even thrown in a couple bonus gifts. If you haven’t signed up yet (it’s free), I recommend you do so here:
Best regards always,