Stock Option Investment Advice

China – Hot, Cold or Lukewarm – Covered Calls

In recent articles, we’ve examined several of the world economies. In this article, we will examine the economy of China. China is the world’s fourth largest economy after the United States, Japan and Germany. China’s economy has grown phenomenally at a rate of over 10% over the last four years. China is the most populous nation on earth with 1/5 of the world’s population.

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China is one of the oldest civilizations on earth with one of the longest historical records. The last Chinese dynasty ended in 1912 with the birth of the Republic of China. During the period of the Republic of China’s reign, China was in frequent political turmoil and civil war until the Communist Party of China gained control of mainland China in 1949 from the Republic of China. As a result of being displaced, The Republic of China retreated to the island of Taiwan.

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While mainland China’s economy has grown substantially over the last few years, the economic prosperity has not had a positive impact for the majority of the Chinese population. Recently, Chinese Premier Wen Jiabao announced China is planning to overhaul the Chinese financial structure in order to support China’s continued growth. Mr. Wen indicated China is planning to forge ahead with market-oriented reforms and stipulated China is intent on improving education and healthcare for its people.

The Shanghai stock market took a dramatic drop at the end of February and subsequently roiled the financial markets of the entire world. Investors planning to invest in Chinese companies should tread carefully, as the high flying Chinese economy could see some bumpy times ahead with changes to mainland China’s financial market structure. While the structure of Chinese financial markets needs to be modified for continued growth, the resulting volatility from the changes could be very high.

Some Chinese companies with optionable stocks are shown below.

Chinese Companies with Optionable Stocks
(For more details click the ticker symbol above)

The covered calls stock options investment strategy allows investors to manage market volatility, as in the case of China, and tailor investments for various risk/reward profiles. Using PowerOptions stock options search tools, we discovered the following covered calls stock options positions for Chinese companies.

PowerOptions covered call search
ACH 24.32 (-0.22) ACHDE 07 APR 25.0 (36) 1.05 4.3 4.5 7.4
AOB 9.45 (-0.03) AOBDB 07 APR 10.0 (36) 0.45 4.8 5.0 11.1
ASIA 6.62 (+0.06) EUJDU 07 APR 7.5 (36) 0.15 2.3 2.3 15.9
BIDU 95.13 (-1.08) BDQDT 07 APR 100.0 (36) 3.10 3.3 3.4 8.7
CN 43.30 (-0.92) CNDI 07 APR 45.0 (36) 1.60 3.7 3.8 7.9
CHL 44.63 (+0.68) CHLDI 07 APR 45.0 (36) 1.85 4.1 4.3 5.2
CHU 11.97 (-0.11) CHUDV 07 APR 12.5 (36) 0.30 2.5 2.6 7.1
COGO 16.37 (+0.87) UWKDW 07 APR 17.5 (36) 0.55 3.4 3.5 10.6  
CTRP 64.36 (+1.60) QCTDM 07 APR 65.0 (36) 2.65 4.1 4.3 5.3  
FMCN 73.44 (+0.43) QOHDO 07 APR 75.0 (36) 2.90 3.9 4.1 6.3  
HMIN 35.85 (-0.38) QHHDH 07 APR 40.0 (36) 1.15 3.2 3.3 15.3  
FXI 97.91 (-0.07) FJJDV 07 APR 98.0 (36) 4.20 4.3 4.5 4.6  
MR 24.08 (+0.08) MRDE 07 APR 25.0 (36) 1.00 4.2 4.3 8.3  
EDU 40.42 (+0.42) EDUDI 07 APR 45.0 (36) 0.95 2.4 2.4 14.0  
PGJ 19.62 (+0.01) PGJDT 07 APR 20.0 (36) 0.60 3.1 3.2 5.2  
XING 16.65 (+0.02) QAEDW 07 APR 17.5 (36) 0.85 5.1 5.4 10.8  
SNDA 21.75 (-0.24) QKUDX 07 APR 22.5 (36) 0.65 3.0 3.1 6.6  
SINA 34.20 (+0.68) NOQDG 07 APR 35.0 (36) 1.10 3.2 3.3 5.8  
SOHU 21.83 (-0.34) UZKDX 07 APR 22.5 (36) 0.60 2.7 2.8 6.0  
NCTY 34.76 (-0.23) NQTDG 07 APR 35.0 (36) 2.30 6.6 7.1 7.8  
(For more details click the ticker symbol above)

For this search, the parameters were set to only find out-of-the-money covered calls stock options positions. The search returned a large number of covered calls positions with potential % if unchanged returns ranging from 2.3% to 7.1% and % if assigned potential returns ranging from 4.6% to 15.9%. Out-of-the-money positions require the price of the stock to increase to the strike price of the option or greater in order to realize the return.

The downside protection for the positions found ranges from 2.3% to 6.6%. As long as a position’s stock price does not decline more than the downside protection at stock options expiration, the position will be profitable.

Competitors for AOB include: China National Pharmaceutical Group Corporation (private), China Shineway Pharmaceutical Group Limited (private), and CK Life Sciences Int’l., (Holdings) Inc (private).
Competitors for ASIA include: Amdocs Ltd. (DOX), Digital China Holdings Limited (private), and Huawei Technologies Co., Ltd. (private).
Competitors for BIDU include: Sina Corp. (SINA), Inc. (SOHU), and TOM Online Inc. (TOMO).
Competitors for CN include: China Mobile Limited (CHL), China Unicom Ltd. (CHU), China Telecommunications Corporation (private), and China Telecom Corp. Ltd. (CHA).
Competitors for CHL include: China Unicom Ltd. (CHU), China Telecommunications

Corporation (private), China Netcom Group Corp. (Hong Kong) Ltd. (CN), and Hutchison Telecom. Intl. Ltd. (HTX).
Competitors for CHU include: China Mobile Communications Corporation (private), China Netcom (Group) Company Limited (private), China Telecommunications Corporation (private), China Telecom Corp. Ltd. (CHA), China Telecom Limited ADR (CHL), China Netcom Group Corp. (Hong Kong) Ltd. (CN), and Hutchison Telecom. Intl. Ltd. (HTX).
Competitors for COGO include: Arrow Electronics Inc. (ARW), Avanex Corp. (AVNX), and Avnet Inc. (AVT).
Competitors for CTRP include: eLong Inc. (LONG), Expedia Inc. (EXPE), and, L.P. (private).
Competitors for FMCN include: Clear Media Limited (private), JCDecaux S.A. (private), and TOM Group Limited (private).
Competitors for HMIN include: Accor (private), Days Inns Worldwide, Inc. (private), and Super 8 Motels, Inc. (private).
Competitors for MR include: Abbott Laboratories (ABT), Bayer HealthCare AG (private), and GE Healthcare (private).
Competitors for EDU include: Princeton Review Inc. (REVU), and Kaplan, Inc. (private).
Competitors for XING include: Nokia Corp. (NOK), and TCL Corporation (private).
Competitors for SNDA include: Electronic Arts Inc. (ERTS), TOM Online Inc. (TOMO), Sony Online Entertainment, Inc. (private), GigaMedia Ltd. (GIGM), and The9 Ltd. (NCTY).
Competitors for SINA include: Inc. (NTES), Inc. (SOHU), Yahoo! Inc. (YHOO), Inc. (BIDU), KongZhong Corp. (KONG), The9 Ltd. (NCTY), and Tom Online Inc. (TOMO).
Competitors for NCTY include: Inc. (NTES), Shanda Interactive Entertainment Ltd. (SNDA), and Sina Corp. (SINA).
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.

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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] China, United States, Japan, Germany, Republic of China, Communist Party of China, Taiwan, Wen Jiabao, Shanghai, China National Pharmaceutical Group Corporation, China Shineway Pharmaceutical Group Limited, CK Life Sciences Int’l., (Holdings) Inc, Digital China Holdings Limited, Huawei Technologies Co., Ltd., China Telecommunications Corporation, China Mobile Communications Corporation, China Netcom (Group) Company Limited,, L.P., Clear Media Limited, JCDecaux S.A., TOM Group Limited, Accor, Days Inns Worldwide, Inc., Super 8 Motels, Inc., Bayer HealthCare AG, GE Healthcare, Kaplan, Inc., TCL Corporation, Sony Online Entertainment, Inc., ABT, Abbott Labs, ARW, Arrow Electronics Inc., AVT, Avnet Inc., BIDU, Inc., CHA, China Telecom Corp. Ltd., CHL, China Telecom Limited ADR, CHU, China Unicom Ltd., CN, China Netcom Group Corp. (Hong Kong) Ltd., DOX, Amdocs Ltd., ERTS, Electronic Arts Inc., EXPE, Expedia Inc., GIGM, GigaMedia Ltd., HTX, Hutchison Telecom. Intl. Ltd., KONG, KongZhong Corp., NCTY, The9 Ltd., NOK, Nokia Corp. ADR, NTES, Inc. ADR, SINA, Sina Corp., SNDA, Shanda Interactive Ent. Ltd., SOHU, Inc., TOMO, Tom Online Inc., YHOO, Yahoo Inc., covered call investment strategy, investment strategy, iron condor, poweroptions, stock option trading, stock options [/tags]

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