Speaking on Bloomberg Markets, Kevin Kelly of Recon Capital Partners suggested a covered call strategy in Microsoft Corporation MSFT.
He explained that investors who feel comfortable owning the stock at its current price should sell the January 2017, 57.5 strike call for $2.40, against a long stock position.
Kelly added that the strategy offers 4.87 percent protection on the downside and if the stock trades lower, he would buy to close the January 57.5 call and rewrite a lower strike call to generate more income. Microsoft Corporation offers additional protection with its 3 percent dividend yield.
With this strategy investors increase their selling price to $59.90, which is 21.55 percent higher than the current stock price.
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Posted In: Long IdeasOptionsMarketsMediaTrading IdeasBloomberg MarketsKevin KellyRecon Capital Partners
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