Below is the option strategy for a covered write on Agilent Technologies (A). This will produce monthly investment income over a 30 day time period.
Look at the December 2011 39 covered call. For each 100 shares of Agilent Technologies (A) stock you buy, sell one December 2011 39 covered call option for a 37.65 (39.85 – 2.20) debit or better. That’s potentially a 3.6% assigned return in 30 days or comparable to a 43.8% annualized return.
The technicals for A are bullish with a weak upward trend. The stock is under accumulation with support at 37.03. S&P rates this stock 4 STARS (out of five) – buy.
For investors seeking more downside protection, buy the May 2012 37 PUT for $4.50. Sell the put when you exit the covered call trade. The PUT protection is optional and not required to place the covered call trade.