Investing in Green Companies – Covered Calls

Today, PowerOptions takes a quick look at companies specializing in alternative energy and potential covered call opportunities.

Audio Podcast:
An audio podcast of this article is available at: poweropt.com/podcasts/2007_04_19_AltEnergy.mp3

Because the price of gasoline has lately been the focus of so much consternation, alternative energy company’s stock prices may increase as their products become more widely accepted.

This article serves as an example of how the average investor can identify the most attractive option trade based on their view of whether a stock will rise or fall. In this case we will assume the following alternative energy companies will experience a short-term rise in their stock price. This may be an erroneous assumption, but therein lies the beauty of the PowerOption’s website. If an investor’s view is bullish, they might choose to use bull call debit spreads or bull-put credit spreads to make money off their hunch. If an investor believes a stock will fall, they might choose bear put debit spreads or bear-call credit spreads. Today we will look at a covered call investment strategy. Click on any of the above links for more information about the specific strategy or take a look at our covered call example.

Wind Energy:
FPL Group (FPL) – The FPL Group engages in the generation, transmission, distribution, and sale of electric energy. It produces electricity utilizing natural gas, wind, nuclear, oil, hydro, and other resources. As of December 31, 2006, the company served approximately 4.4 million residential, commercial, and industrial customer accounts in the east and lower west coasts of Florida, as well as operated generating assets of approximately 34,300 megawatts capacity.

Competitors:
Competitors for FPL include: Progress Energy Inc. (PGN), Southern Co. (SO), and TECO Energy Inc. (TE).

FPL -This trade involves the June $60 call option and offers 4.8% downside protection and 1.5% potential profit if the stock is above the $60.00 strike price at the end of the option period. The stock is currently trading at $62.06.

Solar Energy:
Day Star Tech (DSTI) – This stock does not offer options, but may fit well into your straight stock portfolio. DayStar Technologies, Inc. engages in the development, manufacture, and marketing of photovoltaic products that convert sunlight directly into electricity in North America, Europe, and Asia. The company develops a thin-film solar cell based upon the copper-indium-gallium-selenide semiconductor material system, known as CIGS. Its products include TerraFoil, a metal foil solar cell designed as an alternative to silicon wafer solar cells used in flat plate PV modules

Competitors:
Competitors for DSTI include: BP Solar International LLC (private), Kyocera Solar, Inc. (private), and SolarWorld AG (private).
BioFuel:
Pacific Ethanol (PEIX) — Pacific Ethanol, Inc. produces and markets renewable fuels in the western United States. It produces and sells ethanol, and provides transportation, storage, and delivery services through third-party service providers in the western United States, primarily in California, Nevada, Arizona, Washington, Oregon, and Colorado.

Competitors:
Competitors for PEIX include: Archer-Daniels-Midland Co. (ADM), Ag Processing Inc (private), and Melrose Resources plc (private).

PEIX -This trade involves the June $15.00 call option and offers 7.6% downside protection and 7.4% potential profit if the stock is above the $15.00 strike price at the end of the option period. The stock is currently trading at $15.11.

Fuel Cell:
FuelCell Energy INC (FCEL) –FuelCell Energy, Inc. engages in the development, manufacture, and sale of fuel cell power plants for electric power generation. Its core carbonate fuel cell products include Direct FuelCell and DFC Power Plants. The company’s carbonate fuel cell products electrochemically produce electricity from hydrocarbon fuels, such as natural gas and biomass fuels.

Competitors:
Competitors for FCEL include: Ballard Power Systems Inc. (BLDP), Energy Conversion Devices, Inc. (ENER), Plug Power Inc. (PLUG), and Hydrogenics Corp. (HYGS).

FCEL -This trade involves the May $7.50 call option and offers 11.3% downside protection and 11.9% potential profit if the stock is above the $7.50 strike price at the end of the option period. The stock is currently trading at $7.54.

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] North America, Europe, Asia, TerraFoil, BP Solar International LLC, Kyocera Solar, Inc., SolarWorld AG, United States, California, Nevada, Arizona, Washington, Oregon, Colorado, Ag Processing Inc, Melrose Resources plc, Direct FuelCell, DFC Power Plants, ADM, Archer-Daniels-Midland Co., BLDP, Ballard Power Systems Inc., ENER, Energy Conversion Devices Inc., FCEL, FuelCell Energy Inc., FPL, FPL Group Inc., PEIX, Pacific Ethanol Inc., PGN, Progress Energy Inc., PLUG, Plug Power Inc., SO, Southern Co., TE, TECO Energy Inc., bear put debit spreads, bear-call credit spreads, bull call debit spreads, bull-put credit spreads, covered call example, covered call investment strategy, investment strategy, iron condor, poweroptions, stock option trading, stock options [/tags]