Investing in India – Spicier than Curry – Covered Calls

India is the 12th largest economy in the world with the second largest population in the world. India was at one time a colony of the British Empire gaining its independence in 1947. With a growth rate in the 9% range, India’s economy is one of the fastest growing in the world.

India also has the largest population of English speaking citizens with over 350 million able to converse in the language.

If China continues its one-child policy, it is projected India will surpass China as the most populace nation in the world by the middle of this century.

Before 1991, India retained tight controls on its economy, but after 1991, India began to gradually convert to an open market economy. With it’s large English speaking population and large pool of cheap laborers, India is in the process of building a very large software development industry.

Even though India has developed a high growth economy through its market reforms, India still has a very large portion of its population living at or below the poverty level. However, with its large English speaking population and its open market reforms, the future for India is bright.

Some Indian companies with optionable stocks are shown below.

Using PowerOptions stock options search tools, the following covered calls positions were found for companies based in India.

All of the covered calls stock options positions found are out-of-the-money. In order to realize the maximum return for an out-of-the-money covered calls stock options position, the price of the stock must increase to or above the strike price of the call option at stock option expiration. For example, the largest possible return available is for the SIFY position with a potential % if assigned return of 14.3%. To realize the full 14.3%, the stock price must increase from $9.10 to the strike price of the stock option which is at $10.

The covered calls positions found have a range of potential returns with a variety of expiration months. The combination of variable returns with a variety of downside protections available allows investors to find covered calls positions meeting their own personal risk/reward profile.

Competitors:
Competitors for RDY include: Eli Lilly & Co. (LLY), Glaxosmithkline plc (GSK), and Ranbaxy Laboratories Limited (private).
Competitors for IBN include: Canara Bank (private), Punjab National Bank (private), and State Bank of India (private).
Competitors for INFY include: Satyam Computer Services Ltd. (SAY), Tata Consultancy Services Limited (private), Wipro Technologies (private), CDC Corp. (CHINA), Cognizant Tech. Solution Corp. (CTSH), Diamondcluster Intl. Inc. (DTPI), eFunds Corp. (EFD), and Wipro Ltd. (WIT).
Competitors for REDF include: Sify Ltd. (SIFY), Yahoo! Inc. (YHOO), and Smart Information Worldwide, Inc. (private).
Competitors for SIFY include: Mahanagar Telephone Nigam Ltd. (MTE), Rediff.com India Ltd. (REDF), and Videsh Sanchar Nigam Ltd. (VSL).
Competitors for TTM include: Ford Motor Co. (F), General Motors Corporation (GM), and Maruti Udyog Ltd. (private).
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