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Covered Call Trades for July 2011

Last week the major equity indexes looked oversold and the chances looked good for a short-term rally. Surprisingly the only rally attempt came last Thursday and it was feeble at best. Most indicators are now even more oversold so chances are greater for an oversold bounce this week but still uncertainity in the month.

With the current market pullback and more uncertainity, I am looking at writing calls below the stock price for a 5% or so downside protection.  Below is the covered call trades for the July 2011 call options.  You purchase 100 shares of stock and sell 1 call for the covered call trade.  You can sell the at-the-money call (ATM) or you can sell one strike price below market price for a more conservative covered call.  The table provides the prices and volatility for the ATM strike prices.

Click to enlarge

 

Whole Foods Market, Inc. (WFM) is a natural and organic foods supermarket. The Company has one operating segment, natural and organic foods supermarkets. As of September 26, 2010, the Company operated 299 stores in the United States, Canada and the United Kingdom. Its stores average 37,600 square feet in size and nine years in age, and are supported by its Austin headquarters, regional offices, distribution centers, bakehouse facilities, commissary kitchens, seafood-processing facilities, meat and produce procurement centers, and a specialty coffee, tea procurement and brewing operation. As of September 26, 2010, the Company operated 299 stores, of which 288 stores operated in 38 United States, states and the District of Columbia; six stores in Canada, and five stores in the United Kingdom. It owns 11 stores, two distribution facilities and land for one store in development, including the adjacent property.

Salesforce.com, Inc. (CRM) is a provider of enterprise cloud computing applications. The Company provides a customer and collaboration relationship management (CRM), service to businesses of all sizes and industries worldwide and provides a technology platform for customers and developers to build and run business applications. Cloud computing refers to the use of Internet-based computing, storage and connectivity technology for a variety of different services. The Company designed and developed its offering, which can be deployed, customized and integrated with other software applications. The Company delivers its service through the Web browsers. It markets its service to businesses on a subscription basis, primarily through its direct sales efforts and indirectly through partners. In May 2010, the Company acquired Jigsaw Data Corporation, a cloud provider of crowd-sourced data services in the cloud. In January 2011, it acquired Heroku, Inc. and Dimdim, Inc.
National Oilwell Varco, Inc. (NOV) is a provider of equipment and components used in oil and gas drilling and production operations, oilfield services and supply chain integration services to the upstream oil and gas industry. It operates in three business segments: Rig Technology, Petroleum Services & Supplies and Distribution Services. The Rig Technology segment designs, manufactures, sells and services systems for the drilling, completion and servicing of oil and gas wells. The Petroleum Services & Supplies segment provides consumable goods and services used to drill, complete, remediate and workover oil and gas wells, service pipelines, flowlines and other oilfield tubular goods. The Distribution Services segment provides maintenance, repair and operating supplies, and spare parts to drill site and production locations worldwide. It acquired Advanced Production and Loading PLC in December 2010. In January 2010, it acquired Ambar Lone Star Fluid Services, LLC.
Anadarko Petroleum Corporation (APC) is an independent oil and natural gas exploration and production company. As of December 31, 2010, it had 2.4 billion barrels of oil equivalent of proved reserves. Anadarko’s portfolio of assets includes positions in onshore resource plays in the Rocky Mountains region, the southern United States and the Appalachian basin. Anadarko operates in three operating segments: oil and gas exploration and production, midstream, and marketing. Oil and gas exploration and production segment explores for and produces natural gas, crude oil, condensate and natural gas liquids (NGLs). Midstream segment provides gathering, processing, treating and transportation services to Anadarko and third-party oil and gas producers. It owns and operates natural gas gathering, processing, treating and transportation systems in the United States. Marketing segment sells much of Anadarko’s production, as well as hydrocarbons purchased from third parties.

 

Avnet, Inc. (AVT), along with its subsidiaries, is an industrial distributor of electronic components, enterprise computer and storage products and embedded subsystems. It distributes electronic components, computer products and software as received from its suppliers or with assembly or other value added by Avnet. It also provides engineering design, materials management and logistics services, system integration and configuration, and supply chain services that can be customized to meet the requirements of both customers and suppliers. It has two primary operating groups: Electronics Marketing, which markets and sells semiconductors and interconnect, passive and electromechanical devices and embedded products for more than 300 electronic component manufacturers; and Technology Solutions, which markets and sells mid- to high-end servers, data storage, software and the services required to implement these products and solutions to the value-added reseller channel.

 

Plains Exploration & Production Company (PXP) is an independent oil and gas company engaged in the upstream oil and gas business. The upstream business acquires, develops, explores for and produces oil and gas. Its upstream activities are located in the United States. The Company owns oil and gas properties with principal operations in Onshore California, Offshore California, the Gulf Coast Region, the Mid-Continent Region and the Rocky Mountains. As of December 31, 2010, it had proved reserves of 416.1 million barrels of oil equivalent, of which 54% consisted of oil and 57% was proved developed.

 

Chevron Corporation (CVX) manages its investments in subsidiaries and affiliates and provides administrative, financial, management and technology support to the United States and international subsidiaries that engage in petroleum operations, chemicals operations, mining operations, power generation and energy services. Upstream operations consist of exploring for, developing and producing crude oil and natural gas; transporting crude oil by international oil export pipelines; transporting, storage and marketing of natural gas, and a gas-to-liquids project. Downstream operations consist of refining of crude oil into petroleum products marketing of crude oil and refined products. In September 2010, the Company completed acquisition of operating interests in three deepwater exploration blocks in the South China Sea’s Pearl River Mouth Basin. In February 2011, Chevron completed the acquisition of Atlas Energy, Inc.

 

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