In article, “Hewlett-Packard – Saga vs. Stock Performance“, we discussed the Hewlett-Packard (HPQ) boardroom-spying saga and decided the worst was over and it was time to consider a bullish strategy for Hewlett-Packard. We selected two covered calls stock options for Hewlett-Packard with options expiring in November of 2006, and both positions were fully profitable, returning a nice +3.3% average return in only 39 days.
We’re still bullish on Hewlett-Packard and using PowerOptions Option Chain Tool, we discovered the following attractive covered call stock options position for Hewlett-Packard for options expiration in January of 2007:
| Hewlett Packard (HPQ) $ 39.91 JANUARY Expiring 1/20/2007 46 days left | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Strike | Call Sym |
Opt Bid |
%Dnsd. Prot. |
%If Unch. |
%If Asgnd. |
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| 40 | HPQAH | 1.25 | 3.10% | 3.20% | 3.50% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The selected Hewlett-Packard covered calls stock options position has a potential maximum return of +3.5% (46 days) with downside protection of 3.1%. This position is an out-of-the-money [OTM] position and will require the Hewlett-Packard stock price to appreciate in order to receive the maximum potential return.
Even if Hewlett-Packard’s stock price remains stagnant, the position will still return +3.2%. Additionally, as long as the Hewlett-Packard’s stock price does not drop more than 3.1% at stock options expiration, the position will not suffer a loss.
PowerOptions provides a free 14-day trial of its service. So join PowerOptions today, and you too can start reaping the benefits of the covered call investment strategy.
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[tags]HPQ, Hewlett Packard, covered call investment strategy, investment strategy, iron condor, option income, poweroptions, selling naked puts, stock option trading, stock options[/tags]