Written by A.J. Brown

Good Stocks for Covered Call Writing

Collect Premiums with Covered CallsAn anonymous reader says, “My question is what stocks should we use for the covered call strategy? As we all know, even blue chip stocks such as LEH and AIG could go down.”

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:

==> http://www.tradingtrainerblackbox.com/

Best regards always,

A.J. Brown

3 Responses to “Good Stocks for Covered Call Writing”

  1. Tewolde Mehari @ 10:56 am:

    A.J.
    I just started reading this, and I know I missed a lot, but I will seriously look to what you are saying. By the way, I have been attending live seminars with optionetics, would yours be different? please tell me honestly as i already have their home study books, DVDs and CDs.

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  2. A.J. Brown @ 12:31 pm:

    Hello Tewolde.

    I’ve been to live seminars put on by Optionetcs. So, have many of our Trading Trainer members. I know Optionetics is going through some changes after its merger with OptionsXpress, but to what degree I don’t know. What I do know is based on my personal experience and what others have said to me… that what I offer is very much different.

    Hope that helps.

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  3. red shoes for girls @ 8:12 pm:

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Video: Covered Call Writing  

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