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Trade of the Day: HCA Corp. (HCA)

Use covered calls to play HCA


The flop over the Affordable Healthcare Act implementation took some sizzle out of the hospital stocks, but only temporarily. After pulling back to its 50-day moving average at $45, HCA Corp. (HCA)  has jumped up to consolidate between $46 and $47.

HCA Corp.  is the nation’s leading hospital holding company, with 162 hospitals and 113 freestanding surgery centers in 20 states and England. It’s a great way to harness the coming influx of patients as the insurance mandate comes into effect.

Analysts at RBC Capital and BMO Capital Markets have increased their price targets for HCA this month, and I’m projecting that we’ll see a 5% increase from current levels. A covered call is the best way to take advantage of the upside here, especially with bullish seasonality that should benefit a technically strong, liquid name like HCA.

Recommendation: For each 100 shares of HCA owned, sell to open the HCA Dec. $49 calls for $0.30 or better.

Bryan Perry is the editor of Cash Machine, a newsletter focused on high-yield income investing with the goal of maintaining a blended total yield of 10% across two portfolios. Bryan is also the editor of Extreme Income,which uses the power of historically cheap money to create a leveraged “baby hedge fund” strategy that paves the way to massive profits and 4x greater income.

Now is the perfect time to join Bryan Perry’s breakthrough income investing service, Cash Machine Trader, and discover how selling covered-call options can help you manufacture ‘top-up dividends’ of up to 30% per year.

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