Covered Calls: AutoNation (AN)
We just need a little bit more to push over the top. I’m looking at AutoNation (AN), and that’s because the auto business continues to do well in this economy.
I also spoke to friends over the weekend who sell advertising in both radio and TV, and they say auto ad sales are doing just fine, which is another important indicator.
AutoNation happens to have a solid balance sheet and trades at 18 times earnings, which is just shy of analysts’ long-term estimates for earnings growth of 17% So buy 100 shares of AN stock at $54.42 and sell one May 55 call contract for $1.35.
At $135, that puts our total premiums from covered calls above the grand mark at $1,061.
As of this writing, Lawrence Meyers did not hold a position in any of the aforementioned securities. He is president of PDL Broker, Inc., which brokers financing, strategic investments and distressed asset purchases between private equity firms and businesses. He also has written two books and blogs about public policy, journalistic integrity, popular culture, and world affairs. Contact him at email@example.com and follow his tweets @ichabodscranium.