Worried about your investments if your candidate doesn’t win in November? Whether the Internet savvy Obama, or the defense minded McCain prevails, you can protect yourself and even make money with covered call investing.
Look over your portfolio segments. If a democrat wins and you own oil stocks, write covered calls on them with a strike price at or a little lower than the current market price. Since democrats are no friends of big oil, their constant negativity may drive prices down.
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Keep an eye on your call options, and if you see the stock price drop close to the strike price, buy it back to close, and write another call with a still lower strike price. All your call writes should be one month out, no longer, so you can take advantage of time-decay.
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Under a democrat, natural gas stocks may very well rise; being regarded as “green,” “clean energy” sources. A potentially good “green” company to write covered call investing positions on is Maxwell Technologies (MXWL), who makes ultra capacitors for hybrid cars. Anticipating a rise in price, write your covered calls with a slightly higher strike price. As the price approaches the strike price, buy it back to close and write another one with a yet higher strike price. With a democrat victory, your long position in solar or wind technology stocks may also rise in price, so write your covered call investing positions as you would for natural gas stocks. Some potentially good covered call investing positions in those segments are: Owens Corning (OC), or American Superconductor (AMSC).
Similarly, a democrat in the White House may be good news for banks, brokers, and homebuilders. Wall street is already pumping a lot of money into democrat coffers. Democrats would be strong agents for federal relief programs, so stocks such as Morgan Stanley (MS), Toll Brothers (TOL), or Ryland Group (RYL), could potentially be good covered call investing choices.
Health care could be a big issue for either candidate. You can be bullish if a republican wins in November, since the drug sector may rise significantly. Companies like United Healthcare (UNH) would make good covered calls.
If McCain wins, there is a better chance of building more nuclear plants here in the U.S. Since Nuclear is one way to reduce carbon emissions while still providing necessary energy, McCain may convince congress to allay their “three mile island” fears. Any stocks connected with nuclear power, such as Shaw Group (SGR), may very well rise. A good strategy may be to write covered call investing positions with a strike price higher than the current market.
The Iraq conflict has been long and messy, but the US government hasn’t lost its appetite for military spending. According to the National Priorities Project, 40 cents of every income-tax dollar paid last year by US citizens went on military. McCain would continue current US policy and defense stocks like Signal Technologies (APSG), could be potentially good covered call investing positions.
So, regardless of whether it’s a Blue or Red win in November, you can protect your investments and also garnish additional premium income from covered calls.
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