Stock Option Investment Advice

John Bogle Says Modest Returns Over Next Decade – Dividends & Covered Calls

In an article in the Wall Street Journal (, John Bogle predicts moderate returns over the next decade, on the order of 7% annually.

At this point an investor may be saying “so what, who’s John Bogle, and why should I care?” Mr. Bogle was the founder of the Vanguard Group, the company with the famous family of no-load/low-cost mutual funds. Additionally, Mr. Bogle accurately predicted the stock market’s demise in 2000 and the stock market’s recovery in 2002.

So, if John Bogle says investors will probably experience mediocre returns over the next decade, based on past history, that’s probably what will happen.

At this point an investor may be groveling “7% a year, I can make better than that with bonds”. And maybe investors should consider investing in bonds, but an investor might also consider the covered calls stock options investment strategy.

The covered calls stock options strategy gives investors access to potential income — even if the stock market remains stagnant or drops slightly. And for investors who like the income generated from dividend paying companies, they can target the covered calls stock options strategy for dividend paying companies and generate income from dividend payments and also potentially experience income from the premiums from the covered call strategy as well.

Potential Trades:
Using PowerOptions powerful search tools, we executed a covered calls stock options search for high dividend yield positions for options expiration in April of 2007, the positions found are shown below.

SmartSearchXL covered call search
ACH 24.54 (+0.95) ACHDX 07 APR 22.5 (45) 2.70 11.0 3.0 3.0 13.0
ACH 24.54 (+0.95) ACHDE 07 APR 25.0 (45) 1.30 5.3 5.6 7.6 13.0
TMA 25.32 (+0.24) TMADE 07 APR 25.0 (45) 1.20 4.7 3.7 3.7 10.8
EGLE 19.56 (+0.25) QEKDD 07 APR 20.0 (45) 0.45 2.3 2.4 4.7 10.6
SID 35.41 (+0.94) SIDDG 07 APR 35.0 (45) 2.10 5.9 5.1 5.1 10.5
PCU 69.22 (+1.60) PCUDM 07 APR 65.0 (45) 6.20 9.0 3.1 3.1 10.1
PCU 69.22 (+1.60) PCUDN 07 APR 70.0 (45) 3.40 4.9 5.2 6.3 10.1
AB 84.50 (+1.48) ABDQ 07 APR 85.0 (45) 2.50 3.0 3.0 3.7 7.1
(to see more details for a company click on the company’s ticker symbol above)

All of the positions found have dividend yields greater than Mr. Bogle’s predicted 7% annual return for the stock market over the next decade, some are almost double Mr. Bogle’s 7% expected annual return over the next decade. Additionally, these positions have potential returns ranging from 2.4% to 5.6%, even if the price of the stock remains stagnant over the next 45 days.

And, the out-of-the-money positions have greater potential returns if the stock price of the underlying stock increases in price over the next 45 days. For example, the second position (ACH) has a potential return of 7.6% if the stock price of ACH increases to $25 (strike price of option) or greater.

Even better, because of the conservative nature of the covered calls stock options investment strategy, all of the positions have downside protection. So even if the price of the underlying stock does not decrease more than the downside protection, the position remains profitable.

Competitors for TMA include: Fannie Mae (FNM), Freddie Mac (FRE), Wells Fargo & Co. (WFC), Luminent Mortgage Capital Inc. (LUM), Annaly Mortgage Mgmt. Inc. (NLY), and New York Mortgage Trust Inc. (NTR).
Competitors for EGLE include: DryShips, Inc. (DRYS), Excel Maritime Carriers Ltd. (EXM), and Genco Shipping & Trading Ltd. (GSTL).
Competitors for SID include: Arcelor Brasil S.A. (private), Metalúrgica Gerdau S.A. (private), Companhia Siderúrgica Paulista (private), and Gerdau SA (GGB).
Competitors for PCU include: Phelps Dodge Corp. (PD), Rio Tinto plc (RTP), Corporación Nacional del Cobre de Chile (private), Peru Copper Inc. (CUP), and Freeport-McMoran Copper & Gold Inc. (FCX).
Competitors for AB include: Merrill Lynch & Co. Inc. (MER), FMR Corp. (private), and UBS Financial Services Inc. (private).
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.

For more information about how to identify and research great option trades, visit the PowerOptions website. There you will find the data you need to make quick, clear, and informed decisions. You can trade knowing you have found the best investment. Also, PowerOptions will allow you, with a few quick clicks, to quickly and accurately compare trades. PowerOptions‘ premium customer support is second to none in the industry. They can be easily contacted when you need them at their toll-free number to answer customer questions. Call them now toll free at 877-992-7971.

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.

PowerOptions‘ sister company PowerOptionsApplied provides expert stock option trading recommendations. PowerOptionsApplied specializes in covered calls, naked puts and iron condor stock options strategy recommendations. PowerOptionsApplied provides a 30-day risk free trial of its service.

[tags] Wall Street Journal, John Bogle, Vanguard Group, dividend, Arcelor Brasil S.A., Metalúrgica Gerdau S.A., Companhia Siderúrgica Paulista, Corporación Nacional del Cobre de Chile, FMR Corp., UBS Financial Services Inc., ACH, Aluminum Corp. of China Ltd., CUP, Peru Copper Inc., DRYS, DryShips Inc., EXM, Excel Maritime Carriers Ltd., FCX, Freeport-McMoran Copper & Gold Inc., FNM, Fannie Mae, FRE, Freddie Mac Corp., GGB, Gerdau SA, LUM, Luminent Mortgage Capital Inc., MER, Merrill Lynch & Co. Inc., NLY, Annaly Mortgage Mgmt. Inc., NTR, New York Mortgage Trust Inc., PD, Phelps Dodge Corp., RTP, Rio Tinto PLC, WFC, Wells Fargo & Co., covered call investment strategy, investment strategy, iron condor, poweroptions, stock option trading, stock options [/tags]

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