In a PowerOptions WeBlog article, “Hurricanes – Insurance – Options Investing”, we outlined a covered calls stock options strategy for the property & casualty segment of the insurance industry. Using PowerOptions SmartSearchXL stock options search tool, we discovered two attractive covered calls positions. The stock price of both positions dropped after entering the covered calls stock options position, but the positions were still profitable at stock options expiration generating a return of +0.5%, illustrating the beauty of covered calls stock options investing.
In the article, “Insurance Investing Returns +0.5% in Nov.”, we again selected covered calls stock options with expiration in January of 2006 for the property and casualty segment of the insurance industry and repeated the November 2006 result of a +0.5% return. Two of the three stock options positions were fully profitable, HIG and AIG, but the BER position sustained a loss of -3.2%. However, the -3.2% loss for the covered call stock options position was not as bad as outright holding BER which would have resulted in a -6.3% loss.
Once again, we will consider covered calls stock options for the property & casualty segment of the insurance industry. Using PowerOptions search tools, the following covered calls stock options positions were found with stock options expiring in March of 2006:
| SmartSearchXL covered call search for January 23 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Sym |
Stock Price |
Option Sym |
Expire &Strike |
Opt Bid |
%Dnsd. Prot |
%If Unch. |
%If Asgnd. |
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| TWGP | 32.76 (+1.00) | PTQCG | 07 MAR 35.0 (53) | 0.90 | 2.7 | 2.8 | 9.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RNR | 52.85 (+0.55) | RNRCJ | 07 MAR 50.0 (53) | 4.00 | 7.6 | 2.4 | 2.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AIG | 69.78 (-0.68) | AIGCN | 07 MAR 70.0 (53) | 1.55 | 2.2 | 2.3 | 2.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The RNR covered calls stock options investing positions is in-the-money [ITM] with a potential return of 2.4% in only 53 days with downside protection of 7.6%. The TWGP and AIG positions are out-of-the-money [OTM] with potential returns ranging from 2.3% to 9.9% and downside protections of 2.7% and 2.2%, respectively.
ITM covered calls stock options generally provide more downside protection than out-of-the-money [OTM] covered calls stock options positions. OTM covered calls stock options positions generally provide more potential return, but require the underlying stock price to appreciate in order to realize the maximum potential return.
Competitors:
Competitors for these companies include: Allstate Corp. (ALL), Hartford Financial Services Group Inc. (HIG), Selective Insurance Group Inc. (SIGI), Swiss Reinsurance Company (private), Allianz SE (AZ), AXA (AXA), and Zurich Financial Services (private).
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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 stock options positions.
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[tags]blog, General Re Corporation, Swiss Reinsurance Company, Zurich Financial Services, ALL, Allstate Corp., AXA, AXA ADR, HIG, Hartford Fin. Srvs. Group Inc., SIGI, Selective Insurance Group Inc., covered call investment strategy, investment strategy, iron condor, option income, poweroptions, selling naked puts, stock option trading, stock options[/tags]