Covered Calls for Fun & Income

February 22, 2009

Definitely on My Watch List this Week – AGU

Filed under: Covered Calls, Investing — Tags: , , , , , , — Jeff @ 2:35 PM

One of the benefits of using John Brasher’s CallWriter service is his Trading Lab web presentations. Besides covering current market conditions, he identifies candidates for Covered Calls that he has on his watch list. Last week he pointed out Agrium Inc (AGU).

Looking at the chart and fundamentals, I would have to agree with him and it will be on my list for Monday.

Fundamentals: They have cash ($374M), P/E is 4.5 vs. 20.2 for its industry and 12.3 for S&P and don’t have to worry about earnings until April.

Chart: On a rising channel – higher highs and higher lows, MACD above zero, STO at 80, volume increasing.

agu-2-22-09

Strategy: Watch price action Monday. If the price is rising, step in (do not bundle buy/write together) buying the Stock and waiting for price to rise before selling a MAR Call (strike price to be determined by price action) to capitalize on rising premium.

Jeff

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