In the article, “Sewing Up Profits – Covered Calls Investing”, we analyzed the retail fabric market and decided a covered calls stock options strategy was prudent for this segment in light of the popularity of hand made clothing by today’s teens. Two positions were selected for this strategy, and both were profitable returning an average of +2.5%. The Jo-Ann Stores (JAS) position returned the maximum profit of +3.1% and the A.C. Moore Arts & Crafts (ACMR) position returned +1.9%.
Competitors:
Competitors for ACMR and JAS include: Hancock Fabrics Inc. (HKF), and Michaels Stores, Inc. (private).
We’re still bullish on the retail fabric players and using PowerOptions powerful stock options search tool we searched for covered calls positions with options expiration in January of 2007. The following covered calls stock options positions were found:
| SmartSearchXL covered call search for December 20, 2006 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Sym |
Stock Price |
Option Sym |
Expire &Strike |
Opt Bid |
%Dnsd. Prot |
%If Unch. |
%If Asgnd. |
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| JAS | 24.11 (+0.12) | JASAE | 07 JAN 25.0 (31) | 0.6 | 2.5 | 2.6 | 6.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ACMR | 21.72 (+0.17) | QRVAX | 07 JAN 22.5 (31) | 0.4 | 1.8 | 1.9 | 5.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The JAS and ACMR covered calls stock options positions are out-of-the-money [OTM] with maximum potential returns of +6.3% and +5.5% respectively, with profit potential being experienced in only 31 days. OTM positions require the stock price to appreciate in order to receive the maximum potential return.
The JAS and ACMR covered calls positions will return +2.6 and +1.9% respectively, even if the stock price remains stagnant on options expiration day in January of 2007. The JAS and ACMR positions also have nice downside protection of 2.5% and 1.8%, respectively.
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PowerOptions provides Internet based tools for analyzing stock options with specific search criteria and for finding potentially lucrative option income. For those seeking to execute a covered call investment strategy for their personal portfolios, PowerOptions provides an Internet based search engine for finding potentially lucrative income producing covered call options positions.
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[tags]Michaels Stores, Inc., ACMR, A.C. Moore Arts & Crafts Inc., JAS, Jo-Ann Stores Inc. Class A, covered call investment strategy, covered call options, investment strategy, iron condor, option income, poweroptions, stock option trading, stock options[/tags]