In article, “Visa – Plastic Money – IPO“, we analyzed the credit card industry and we used PowerOptions patented SmartSearchXL stock options search tool to find two potential income producing covered calls strategy positions, one for Master Card (MA) and one for American Express (AXP). Both positions returned the maximum potential profit with an average return of 3%, and best of all; the return was generated in only 38 days.
The credit card covered calls investment strategy worked so well last month we will try it again for next month’s stock options expiration. Using PowerOptions SmarSearchXL stock options search tool, we found the following positions for options expiration in December:
| SmartSearchXL covered call search for November 17 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Sym |
Stock Price |
Option Sym |
Expire &Strike |
Opt Bid |
%Dnsd. Prot |
%If Unch. |
%If Asgnd. |
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| MA | 94.52 (-0.78) | MALQ | 06 DEC 85.0 (30) | 11.30 | 12.0 | 2.1 | 2.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MA | 94.52 (-0.78) | MALR | 06 DEC 90.0 (30) | 7.80 | 8.3 | 3.8 | 3.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MA | 94.52 (-0.78) | MALS | 06 DEC 95.0 (30) | 5.20 | 5.5 | 5.8 | 6.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MA | 94.52 (-0.78) | MALT | 06 DEC 100.0 (30) | 3.30 | 3.5 | 3.6 | 9.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MA | 94.52 (-0.78) | MALA | 06 DEC 105.0 (30) | 1.95 | 2.1 | 2.1 | 13.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the covered calls search for December, only positions for Master Card were found, recalling last month we also found a covered calls position for American Express. The potential returns of the covered calls stock options investment strategy positions range from 2.1% all the up to 13.4% (30 days) with downside protections ranging from 2.1% to 12%.
To make the higher returns, the 13.4% return for example, requires the stock price to increase in order to realize the full return; these positions are known as out-of-the-money [OTM]. Positions with significant downside protection, the position with 12% downside protection for example, are know as in-the-money [ITM]. Generally, OTM positions have higher potential return with less downside protection and ITM positions have higher downside protection but less potential return.
[tags]AXP, American Express Co., MA, MasterCard Inc., investment strategy, poweroptions, stock options[/tags]