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Covered Call Trades for August 2011

As we get close to July expiration, we are looking for covered call trades with August expiration.  We just got a terrible jobs report so the market will continue to be choppy.  The U.S. economy added a paltry 18,000 jobs in June, and the unemployment rate climbed to 9.2 percent from 9.1 percent as laid off government workers continued to join the ranks of the unemployed. There were also 44,000 fewer jobs created than previously reported for April and May.  The dismal jobs report also comes just days after the Federal Reserve ended its quantitative easing program, under which it purchased $600 billion in Treasury securities.  This uncertainity will continue to affect market prices.

Also, we are in the earnings season so watch all trades to know when the company reports.  The stocks selected for August are fairly consistent as I had to pull several companies due to high volatility and a bearish outlook.  Cummings (CMI) and Potash (POT) should be steady plays.  New plays include energy with Peabody Energy (BTU) and gold explorer Newfield Mining (NFX).  Both of these stocks have a put-call ratio of .267 which indicates significant call volume interest (bullish).  The chart belows shown all August covered call trades.

Covered Call Trades for August

Click to enlarge

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