Prowling bear:
A pesky bearish market has been prowling around as of late, and generally, covered call investing positions don’t fair too well in a bearish market. A method of covered call investing in bearish markets is to take a defensive strategy, i.e. selecting covered call positions for defensive stocks.
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Defensive stock:
By a defensive stock, we don’t mean a company in the defense industry, although companies in the defense industry can be considered to be in the defensive category. A defensive stock is one that isn’t significantly affected by a slowing economy. An example of an industry, which is not defensive, is the automobile industry. When the economy isn’t doing so well consumers cut back on their purchases of items such as automobiles, and these types of industries are known as cyclical industries. Cyclical industries should be avoided when the economy starts to cool. Many of the stocks in the technology sector are cyclical, so technology stocks should definitely be given very careful study before investment with a covered call position.
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Defensive stock examples:
An example of a defensive industry is food. Consumers don’t cut back on food when the economy is slowing, they may buy hamburger instead of prime rib, but they still purchase food. Other examples of defensive sectors include: health care, tobacco, oil and utilities.
How to find defensive covered call investing postions:
PowerOptions provides the capability to search for covered call investing positions by sector, making it possible to search for defensive stocks such as health care, consumer staples, etc. Using PowerOptions powerful covered call investing search tool we discovered the following positions for the health care industry:
| PowerOptions covered call search | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Sym |
Stock Price |
OPTION | Strike Info |
Opt Bid |
% Dnsd. Prot. |
% If Unch. |
% If Asgnd |
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| MRK | 45.71 (-0.24) | MRKCI | 08 MAR 45.0 (45) | 2.65 | 5.8 | 4.5 | 4.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ABT | 57.73 (+0.39) | ABTCY | 08 MAR 57.5 (45) | 2.35 | 4.1 | 3.8 | 3.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BAX | 59.92 (-0.42) | BAXCL | 08 MAR 60.0 (45) | 2.2 | 3.7 | 3.8 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MRK | 45.71 (-0.24) | MRKCW | 08 MAR 47.5 (45) | 1.45 | 3.2 | 3.3 | 7.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BAX | 59.92 (-0.42) | BAXCY | 08 MAR 57.5 (45) | 3.7 | 6.2 | 2.3 | 2.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additionally, PowerOptions provides the capability to search a specific list of stocks. So if you have a preferred list of defensive stocks you want to search, you can do it.
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.
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[tags] defensive stocks, defensive stock, covered call investing, covered call investment strategy, investment strategy, iron condor, poweroptions, stock option trading, stock options [/tags]