This week, my constant quest for a stream of $1,000 in options income takes us to covered calls in a number of stocks whose businesses you’re probably familiar with — even if you don’t know it.
Picking stocks to sell covered calls against depends on your risk strategy. The more volatile a stock is, the higher the premiums will be. Two general rules for finding good candidates:
- Look for stocks in the $10 billion-$60 billion market cap range
- Look for stocks trading between $35 and $90, more or less.
The first is because midsize stocks tend to trade with some (but not great) volatility. That means you aren’t getting monster premiums, but you aren’t getting monster stock moves, either, as you might get with large-cap growth stocks like Google (GOOG). However, the stock price itself also needs to be high enough to generate decent absolute dollar premiums.
Here are the covered calls to look at for this week: