In article “US Productivity Down – Temp Staffing Up – Kforce (KFRC)” we scoped out the temporary staffing industry and zeroed in on Kforce (KFRC).
With the economy in kind of a limbo state we decided temporary staffing companies might be attractive for investing in covered calls positions. The position we selected for KFRC was fully profitable returning 5.2%.
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The U.S. economy slowed in the first quarter of 2007, with GDP coming in at 1.3%. A large reason for anemic GDP was a result of the slowing housing industry and the subprime mortgage lenders meltdown.
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A covered call strategy for companies involved in outsourcing continues to look attractive. We executed a search for covered calls positions for outsourcing companies using PowerOptions stock option search tools and discovered the following positions.
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| Stock Sym |
Stock Price |
Option Sym |
Expire &Strike |
Opt Bid |
%Dnsd. Prot |
%If Unch. |
%If Asgnd. |
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| RHI | 34.35 (+0.28) | RHIFG | 07 JUN 35.0 (50) | 1.2 | 3.5 | 3.6 | 5.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MAN | 79.92 (+0.31) | MANFP | 07 JUN 80.0 (50) | 2.4 | 3.0 | 3.1 | 3.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LRW | 22.28 (+0.13) | LRWFX | 07 JUN 22.5 (50) | 1.0 | 4.5 | 4.7 | 5.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The position we found last month did not appear, KFRC, but three new positions showed up on the covered calls radar, RHI, MAN and LRW.
The LRW position has the highest potential return at 5.7% (50 days). The 5.7% return requires the price of the LRW stock to increase to or above the call options strike price of $22.5 at stock options expiration. The LRW position also has the largest downside protection and also the largest % if unchanged return 4.5% and 4.7%, respectively. As long as the price of the LRW stock does not decrease more than 4.5% at options expiration, the position will be profitable.
Competitors:
Competitors for RHI include: Kelly Services Inc. (KELYA), Manpower Inc. (MAN), Vedior N.V. (private), Hudson Highland Group Inc. (HHGP), Kforce Inc. (KFRC), MPS Group Inc. (MPS), and Resources Connection Inc. (RECN).
Competitors for MAN include: Adecco SA (ADO), Randstad Holding nv (private), Vedior N.V. (private), Labor Ready Inc. (LRW), Robert Half International Inc. (RHI), and Spherion Corp. (SFN).
Competitors for LRW include: Adecco SA (ADO), Manpower Inc. (MAN), and AHL Services, Inc. (private).
For more information about how to identify and research great option trades, visit the PowerOptions website. PowerOptions will allow you, with a few quick clicks, to quickly and accurately compare trades and you will find the data you need to make quick, clear, and informed decisions. With PowerOptions tools, you can trade knowing you have found the best investment for your risk/reward profile. PowerOptions provides a toll-free number (1-877-992-7971) for customer support (PowerOptions‘s customer support is second to none in the industry) for answering customer questions.
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[tags] Vedior N.V., Randstad Holding nv, AHL Services, Inc., HHGP, Hudson Highland Group Inc., KFRC, Kforce Inc., LRW, Labor Ready Inc., MAN, Manpower Inc., MPS, MPS Group Inc., RECN, Resources Connection Inc., RHI, Robert Half International Inc., SFN, Spherion Corp., covered call investment strategy, investment strategy, iron condor, poweroptions, stock option trading, stock options [/tags]