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FREE Covered Call Trade

Under Armour (UA) is trading at $69.73.  The volatility is high so premiums are being richly rewarded.  Additionally, this covered call is in-the-money to provide more downside protection.  The summary of this covered call recommendation is below.

The UA October ’11 COVERED CALL with a 67.50 strike price could potentially yield a 7.6% return if UA stock stays above $67.50 a share through expiration 50 days from now.  The covered call shown here has a 4 Key (Low Relative Risk) ranking and 10.04% downside protection.  On July 26, 2011 S&P set a $93.00 12-Month price target for UA which is currently trading at $23.27 below that target.  The covered call trade offers limited protection if the stock drops in price but if the stock goes below $62.73 expect losses.

Sell the October 2011 67.50 strike price at $7.00.  Sell one call for each 100 shares of stock you own.  The call strike price is 3.2% in-the-money.  The annual assigned return is 55.51%.  The breakeven is $62.73 so if using a stop, set it above the breakeven.

 

For more covered call recommendations, check out the Get Rich Monthly Income Plan.

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