Another industry we’ll consider which has a tendency to hold up well during an economic malady is the banking industry.
The idea of banks performing well during tough economic times seems counterintuitive, but the reason banks are non-cyclical is due to lower interest rates. Generally, the Federal Reserve lowers interest rates during periods of economic slowness in order to stimulate activity and help prop up the economy. And banks generally do very well in an environment of low interest rates, as their costs for borrowing money are significantly less.
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This scenario is not true for all economic scenarios, for instance if inflation is high during the economic slowdown and the Federal Reserve does not lower interest rates as a result, then banks, like the rest of the cyclical economy will not perform very well.
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Using PowerOptions stock options search capabilities we discovered the following covered call investment positions.
| PowerOptions Covered Call Search | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Sym |
Stock Price |
Option Sym |
Expire &Strike |
Opt Bid |
%Dnsd. Prot. |
%If Unch. |
%If Asgnd. |
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| ITU | 24.98 (-0.30) | ITUGE | 06 JUL 25.0 (33) | 1.55 | 6.2 | 6.6 | 6.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BAC | 47.14 (-0.28) | BACGW | 06 JUL 47.5 (33) | 0.95 | 2.0 | 2.1 | 2.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CBK | 28.18 (-0.47) | CBKGF | 06 JUL 30.0 (33) | 0.70 | 2.5 | 2.5 | 9.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CBH | 34.52 (-0.49) | CBHGG | 06 JUL 35.0 (33) | 1.25 | 3.6 | 3.8 | 5.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CBSS | 54.90 (-0.31) | JQKGK | 06 JUL 55.0 (33) | 1.25 | 2.3 | 2.3 | 2.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DB | 103.90 (-0.55) | DBGA | 06 JUL 105.0 (33) | 3.00 | 2.9 | 3.0 | 4.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FDC | 44.95 (-1.07) | FDCGI | 06 JUL 45.0 (33) | 1.20 | 2.7 | 2.7 | 2.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| IBN | 23.65 (-1.15) | IBNGE | 06 JUL 25.0 (33) | 0.85 | 3.6 | 3.7 | 9.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| JPM | 39.95 (-0.21) | JPMGH | 06 JUL 40.0 (33) | 1.10 | 2.8 | 2.8 | 3.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| KEY | 34.94 (-0.23) | KEYGG | 06 JUL 35.0 (33) | 0.80 | 2.3 | 2.3 | 2.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MI | 44.71 (-0.48) | MIGI | 06 JUL 45.0 (33) | 0.90 | 2.0 | 2.1 | 2.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MEL | 34.98 (-0.39) | MELGG | 06 JUL 35.0 (33) | 0.95 | 2.7 | 2.8 | 2.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NTRS | 54.19 (-0.71) | NRQGK | 06 JUL 55.0 (33) | 1.10 | 2.0 | 2.1 | 3.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| UBS | 103.05 (+0.21) | UBSGA | 06 JUL 105.0 (33) | 2.50 | 2.4 | 2.5 | 4.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| UBB | 59.79 (-2.58) | UBBGL | 06 JUL 60.0 (33) | 3.20 | 5.4 | 5.7 | 6.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The IBN covered call investing position has the highest potential return at 9.6%. To experience the 9.6% return, the price of IBN must increase to or above the call option‘s $25 strike at options expiration.
The ITU covered call investing position has the highest potential unchanged return at 6.6%. If the stock price of ITU remains unchanged at options expiration, the position will return the full 6.6%, and in only 33 days.
The ITU covered call investing position also has the highest downside protection at 6.2%. As long as the stock price of ITU does not decrease more than 6.2% at stock options expiration, the position will be profitable.
Competitors:
Competitors for ITU include: Banco Bradesco S.A. (BBD), Uniao de Bancos Brasileiros S.A. (Unibanco) (UBB), and Banco do Estado de São Paulo S.A. (private).
Competitors for BAC include: Citigroup Inc. (C), Wachovia Corp. (WB), Wells Fargo & Co. (WFC), BB&T Corp. (BBT), BankAtlantic Bancorp (BBX), Banknorth Group Inc. (BNK), Boston Private Fin. Hldgs. Inc. (BPFH), Countrywide Financial Corp. (CFC), Comerica Inc. (CMA), Capital One Financial Corp. (COF), City National Corp. (CYN), East West Bancorp Inc. (EWBC), FirstFed Financial Corp. (FED), First Horizon National Corp. (FHN), Fremont General Corp. (FMT), Greater Bay Bancorp (GBBK), J.P. Morgan Chase (JPM), Mercantile Bankshares Corp. (MRBK), NewAlliance Bancshares Inc. (NAL), Peoples Bank (PBCT), Regions Financial Corp. (RF), SVB Financial Group (SIVB), SLM Hldg. Corp. (SLM), Sun Trust Banks Inc. (STI), Temple-Inland Inc. (TIN), South Fin. Grp. Inc. (TSFG), Union Bank of California Corp. (UB), U.S. Bancorp (USB), Westamerica Bancorp (WABC), Washington Mutual Inc. (WM), and Zions Bancorp. (ZION).
Competitors for CBK include: AnnTaylor Stores Corp. (ANN), Charming Shoppes Inc. (CHRS), and Talbots Inc. (TLB).
Competitors for CBH include: Citigroup Inc. (C), PNC Financial Services Group Inc. (PNC), Wachovia Corp. (WB), Hudson City BCP (HCBK), Provident Financial (PFS), and Valley National Bancorp. (VLY).
Competitors for CBSS include: Colonial Bancgroup Inc. (CNB), Regions Financial Corp. (RF), Wachovia Corp. (WB), and Cullen/Frost Bankers Inc. (CFR).
Competitors for DB include: Citigroup Inc. (C), UBS AG (UBS), Dresdner Bank AG (private), ABN Amro Holding NV (ABN), and Credit Suisse Group (CS).
Competitors for FDC include: Fidelity National Information Services Inc. (FIS), Fiserv Inc. (FISV), Total System Services, Inc. (TSS), Alliance Data Sys. (ADS), Ceridian Corp. (CEN), CyberSource Corp. (CYBS), Global Payments Inc. (GPN), MoneyGram International Inc. (MGI), Synovous Financial Corp (SNV), and Transaction Systems Architects Inc. (TSAI).
Competitors for IBN include: Canara Bank (private), Punjab National Bank (private), and State Bank of India (private).
Competitors for JPM include: Bank of America Corp. (DE) (BAC), Citigroup Inc. (C), Merrill Lynch & Co. Inc. (MER), ABN Amro Holding NV (ABN), Bank of New York Co. Inc. (BK), EPIQ Systems Inc. (EPIQ), Goldman Sachs Group (GS), Investor Fin. Srvs. (IFIN), Northern Trust Corp. (NTRS), New York Community Bancorp Inc. (NYB), Peoples Bank (PBCT), U.S. Bancorp (USB), and Wilmington Trust Corp. (WL).
Competitors for KEY include: National City Corporation (NCC), US Bancorp. (USB), Citizens Financial Group, Inc. (private), Banknorth Group Inc. (BNK), FirstMerit Corp. (FMER), First Niagara Fin. Group Inc. (FNFG), M&T Bank Corp. (MTB), SLM Hldg. Corp. (SLM), and Sovreign Bancorp. (SOV).
Competitors for MI include: Bank of America Corp. (DE) (BAC), US Bancorp. (USB), Wells Fargo & Co. (WFC), and Associated Banc-Corp. (ASBC).
Competitors for MEL include: The Bank of New York Company, Inc. (BK), Northern Trust Corp. (NTRS), and State Street Corp. (STT).
Competitors for NTRS include: The Bank of New York Company, Inc. (BK), Mellon Financial Corp. (MEL), State Street Corp. (STT), and PrivateBancorp Inc. (PVTB).
Competitors for UBS include: Citigroup Inc. (C), Credit Suisse Group (CS), and Deutsche Bank AG (DB).
Competitors for UBB include: Banco Bradesco S.A. (BBD), Banco do Estado de Ṣo Paulo S.A. (private), Ita̼sa РInvestimentos Ita̼ S.A. (private), and Banco Itau Holding Financeira SA (ITU).
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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[tags] Banco do Estado de Ṣo Paulo S.A., Dresdner Bank AG, Canara Bank, Punjab National Bank, State Bank of India, Citizens Financial Group, Inc., Ita̼sa РInvestimentos Ita̼ S.A., ABN, ABN Amro Holding NV, ADS, Alliance Data Sys., ANN, Ann Taylor Stores Inc., ASBC, Associated Banc-Corp., BAC, BankAmerica Corp., BBD, Banco Bradesco S.A., BBT, BB&T Corp., BBX, BankAtlantic Bancorp, BK, Bank of New York Co. Inc., BPFH, Boston Private Fin. Hldgs. Inc., C, Citigroup Inc., CEN, Ceridian Corp., CFC, Countrywide Financial Corp., CFR, Cullen/Frost Bankers Inc., CHRS, Charming Shoppes Inc., CMA, Comerica Inc., CNB, Colonial BancGroup Inc, COF, Capital One Financial Corp., CS, Credit Suisse Group, CYBS, CyberSource Corp., CYN, City National Corp., DB, Deutsche Bank AG, DE, Deere & Co., EPIQ, EPIQ Systems Inc., EWBC, East West Bancorp Inc., FED, FirstFed Financial Corp., FHN, First Horizon National Corp., FIS, Fidelity National Info. Srvs. Inc., FISV, Flserv Inc., FMER, FirstMerit Corp., FMT, Fremont General Corp., FNFG, First Niagara Fin. Group Inc., GBBK, Greater Bay Bancorp, GPN, Global Payments Inc., GS, Goldman Sachs Group, HCBK, Hudson City BCP, IFIN, Investor Fin. Srvs., ITU, Banco Itau Holding Financeira SA, JPM, J.P. Morgan Chase, MEL, Mellon Financial Corp., MER, Merrill Lynch & Co. Inc., MGI, MoneyGram Intl. Inc., MTB, M&T Bank Corp., NAL, NewAlliance Bancshares Inc., NCC, National City Corp., NTRS, Northern Trust Corp., NYB, New York Community Bancorp Inc., PBCT, Peoples United Fin. Inc., PFS, Provident Financial, PNC, PNC Bank Corp., PVTB, PrivateBancorp Inc., RF, Regions Financial Corp., SIVB, SVB Financial Group, SLM, SLM Hldg. Corp., SNV, Synovous Financial Corp, SOV, Sovreign Bancorp., STI, Sun Trust Banks Inc., STT, State Street Boston Corp., TIN, Temple-Inland Inc., TLB, Talbots Inc., TSAI, Transaction Systems Architects Inc., TSFG, South Fin. Grp. Inc., TSS, Total System Services Inc., UB, Union Bank of California Corp., UBB, Unibanco Uniao de Bancos Brasileros, UBS, UBS AG, USB, U.S. Bancorp, VLY, Valley National Bancorp., WABC, Westamerica Bancorp, WB, Wachovia Corp., WFC, Wells Fargo & Co., WL, Wilmington Trust Corp., WM, Washington Mutual Inc., ZION, Zions Bancorp., covered call investing, covered call investment strategy, investment strategy, iron condor, poweroptions, stock option trading, stock options [/tags]