Best Stocks for Covered Calls: To sell a call option, you must hold 100 shares of the underlying Stock. A covered call is a bullish tactic. You should put your money into dependable, high-quality large-cap stocks. A high beta stock is unstable. Thus you don’t want it. They shouldn’t make any substantial, arbitrary downward movements.

Keep your investments in well-known, widely traded companies since they will have superior liquidity. Your stock will undoubtedly have the finest supplies for covered calls available for you to change if it meets these requirements. It’s also a brilliant idea to sell covered puts on dividend-paying stocks.

Most covered call and cash-secured put investors will access a wide range of fundamentally sound stocks. Then, they check their technical once a week to see if anything has been configured.

What is the Covered Call

Both shares of the underlying stock and a call option constitute a covered call. A covered call is when you sell the call option while keeping the underlying stock. With covered calls, the buyer can purchase the underlying stock at a predetermined price and period in exchange for a premium given to the seller.

The bonus is the main factor influencing why so many investors pick this strategy. The users and subscribers of many stock advisory services are given recommendations for a select group of the best stocks.

When the covered call matures, these scenarios could take place:

• Shares are currently trading for less than the strike price.
• There is no need to make a decision again because it has expired.
• The current share price is higher than the strike price.

When the option is exercised, your shares are automatically sold at the strike price. Whatever the situation, the seller has already received the call option premium. As a result, the buyer assumes this risk while buying a covered call.

Using stock signals, you may grasp the market without wasting time on technical analysis. To get the most out of purchasing a covered call option, consider:

• when the stock price reaches the level that you want
• when a significant company announcement is anticipated to cause a sharp increase in price

Best Stocks for Covered Calls

The underlying stock, the term, and the strike are the three factors that drive any covered call trade. Before selecting the best-covered call stocks, you should consider the benefits and cons of each one. You have a few things to consider based on your investment strategy when choosing the best-covered call stocks:

Pick stocks carefully because they will become a part of your portfolio, and their performance will determine your return on investment. Making money on a stock with a decreasing price trend will be challenging.

Consider if the premium is worthwhile given the level of risk involved in the covered call strategy.

Even though stocks will outperform covered call trade strategies during a bull market, profits will still be made. The best equities for covered call strategies that can produce profitable premiums during 2022 are listed below:

1. Pfizer Inc. (NYSE: PFZR)

Pfizer Inc. is a large, internationally recognized biopharmaceutical firm. The company creates, develops, produces, markets, sells, and distributes biopharmaceutical products. Its global business includes medicines and vaccines. Learn about the top vaccine stocks to buy right now.

The business just released its fourth-quarter report for 2021, which showed good financial performance. $23.8 billion was recorded as total revenue, a 106 percent increase from the previous year. The reported adjusted earnings per share were $1.08.

The pharmaceutical stock market has grown significantly during the past few years.

According to a patient view global poll, Pfizer was placed second among large biopharma businesses. It also came in on Fortune’s list of the world’s most admired companies. Additionally, the corporation served 1.4 billion patients in 2021 with its vaccinations and medications.

The biopharmaceutical business expects revenue of between $98 and $102 billion, a record high, and earnings per share between $6.35 and $6.55.

Moreover, Pfizer is forecast to be able to continue expanding its dividend and seek new business development thanks to a solid balance sheet and anticipated near-term incremental free cash flow.

Pfizer’s market value is approximately $264 billion. The price of the company’s stock is $46.94. CNN Money reports that analysts’ 12-month price forecasts range from $49 to $76, with a median price estimate of $57.

2. Nvidia (NASDAQ: NVDA)

The manufacturer of graphics cards and creator of graphics processing units (GPUs) is NVIDIA. For supercomputing and AI acceleration, the business creates a variety of graphics and general-purpose GPU (GPGPU) solutions, as well as rack-mounted AI acceleration units and servers for GPGPU.

Under the GeForce name, NVIDIA produces some of the most recognizable consumer graphics cards. NVIDIA GeForce is the company’s most popular gaming platform, with over 200 million users.

The NVIDIA annual report for 2022 was just released. The business recorded $16.7 billion in revenue, up 53% from the previous year. Earnings per share were announced at $6.9, a 53 percent increase from the last year, with a net income of $4.3 billion. The computing platforms from NVIDIA had a breakthrough year in 2014.

The company’s groundbreaking work in accelerated computing has contributed to the gaming as the most popular form of entertainment worldwide, the democratization of supercomputing for all scholars, and the emergence of AI as the most significant force in technology.

The company anticipates revenue of about $5.3 billion and gross margins of between 63.8 and 66 percent for the upcoming quarter.

The market value of NVIDIA is more than $607 billion. The current price of the company’s shares is $243.85. CNN Money reports that analysts have a median target price of $350, a maximum price estimate of $400, and a minimum price prognosis of $210.

A lot of investor interest is focused on the high-growth area of cybersecurity equities.

3. Oracle (NYSE: ORCL)

The software and services provided by Oracle, a company in the computer industry, include Java. Oracle provides its database management systems and cloud-engineering services and solutions through the four primary business sectors of the company: cloud and license, hardware, and services. One of the best investment prospects is semi-conductor stock.

Oracle reported sales of $10.4 billion in its financial report for the second quarter, a rise of 6%. Revenues from cloud services and licensing support have grown by 6%.

Cloud license and on-premise license revenues increased by 13%, and Non-GAAP earnings per share increased by 14% to $1.21 among Oracle’s revenue-generating areas. The company’s infrastructure and application cloud operations have expanded by 22%, resulting in these excellent results.

Oracle’s market value is approximately $75.97. The cost of the company’s share is currently $75.97. According to CNN Money, economists predict that prices will reach a median target price of $105, a maximum of $126, and a minimum of $83.

Consider making a bond investment. Find out if investing in bonds or stocks is a wise choice.

4. Devon Energy (NYSE: DVN)

With an outstanding multi-basin portfolio highlighted by a top-tier acreage position in the Delaware Basin, Devon Energy is one of the country’s top oil and gas producers. Devon’s structured cash-return business model aims to generate free cash flow, return capital to shareholders, and earn excellent returns while emphasizing secure and long-lasting operations.

According to the CEO, because of these principles, Devon is now well-positioned to be a significant and reliable builder of economic value over the cycle. Find out which businesses are leading the industry in terms of crypto mining.

The company released recent results for the fourth quarter of 2021’s fiscal and operational operations. According to reports, net earnings totaled $1.4 billion, while total revenues were reported to be $4.3 billion. $2.23 was declared as the earnings per share.

The corporation demonstrated solid liquidity with cash on hand of $2.3 billion and a better debt situation. As of December 31, 2021, the net debt to equity ratio was 0.8 times, thanks to the company’s ability to reduce debt by $1.2 billion.

Twenty-nine years straight of dividend payments are a tradition at Devon Energy. The business disclosed a $1 per share dividend for this quarter. Technical analysis books and various paid courses are readily available and offer comprehensive information.

For 2022, the business is in a good position for rapid expansion. Between 570 and 600 MBOED of total output are anticipated, and Devon Energy is in an excellent place to generate a competitive free cash flow return.

With a $39.55 billion market value, Devon Energy. The company’s price per share is $59.55 at the time of this writing. CNN Money reports that experts have a consensus price target of $59.54 and a 12-month price estimate that ranges from a minimum of $60 to a maximum of $70.

5. ConocoPhillips (NYSE: COP)

ConocoPhillips is a global company involved in the exploration, production, transportation, and marketing of natural gas, liquid natural gas, liquefied natural gas, bitumen, crude oil, and other fuels. Stocks related to solar energy have driven this quarter’s stock market advances.

In its fourth-quarter report for the year 2021, ConocoPhillips noted exceptional operational success. In the center of the Permian Basin, the company closed on two sizeable, highly-accretive acquisitions and produced good returns on and of capital for its stockholders.

The business achieved adjusted earnings of $8 billion and $2.27 per share. ConocoPhillips additionally distributed $2.4 billion in cash dividends to stockholders. The company achieved a 14 percent Return on Capital Employed and $10.4 billion in free cash flow.

Additionally, ConocoPhillips predicted that in 2022, average production would be at 1.8 million barrels of oil equivalent per day, and it has plans to spend $7.2 billion on capital improvements. The firm finalized the $9.5 billion cash acquisition of Shell’s Permian stake.

The price of the ConocoPhillips share is $94.86 at the time of writing. The market value of the business is $94.86. According to CNN Money, experts project a 12-month price range of up to $128, down to $77, and a consensus target price of $106.

6. Ford Motor Company (NYSE: F)

A whole line of Ford trucks, automobiles, SUVs and luxury Lincoln vehicles are designed, produced, sold, and serviced by Ford Motor Company, an automaker. The business is divided into three segments:

• Automotive: This sector creates, produces, distributes, and provides maintenance for Ford and Lincoln vehicles and their parts and accessories.
• Mobility: The development of Ford’s autonomous vehicles and associated businesses is the segment’s primary focus.
• Ford Credit: On a consolidated basis, the Ford Credit business, which consists of financing and leasing activities for vehicles, makes up this section.

The business just released its 2021 fourth-quarter financial figures. A 5 percent rise in revenue was reported to be $37.7 billion, primarily due to increased net pricing and mix enhancement. The earnings per share were $0.26. Stocks that are good for long-term investments have received a lot of attention.

The business has plans to seize fresh growth prospects in the upcoming year. The company revealed plans to manufacture the next-generation electric F-Series pickups and advanced batteries in BlueOval City and BlueOval SK Battery Park with an investment of $11.4 billion by the end of the decade.

Ford Motors also plans to quadruple its annual BEV production capacity to 600K units by 2023 and wants to dominate the domestic market.

The market value of Ford Motor Company is more than $70 billion. The price of the company’s shares is currently $17.56. According to CNN Money, analysts predict that the price will reach a top of $30, a minimum of $13, and a median target price of $22.5 during the next 12 months.

7. Acadia Healthcare Corporation (ACHC)

The top provider of behavioral healthcare services in the US is Acadia. It is the biggest independent behavioral health company in the United States. Acadia offers behavioral healthcare services to its patients in various venues, including outpatient clinics, residential treatment centers, specialist treatment facilities, inpatient psychiatric hospitals, and residential treatment centers.

The ACHC provides daily care for almost 70,000 patients with a staff of more than 22,500 personnel. By March 31, 2022, Acadia was running a network of 238 facilities for behavioral healthcare with about 10,600 beds spread throughout 40 states and Puerto Rico.

Listed below are the financial results announced by Acadia Healthcare Company, Inc. for the three months ending March 31, 2022:

• In terms of revenue, there was $ 616.7 million, up 11.9 percent from the first quarter of 2021.
• Acadia’s share of net income came to $60.8 million.
• The earnings per diluted share were $0.67.
• Total adjusted EBITDA was $135,5 million.
• Operating activities generated a full cash flow of $76.6 million.

According to ACHC, revenue is expected to be over $ 2.6 billion in 2022.

The market value of Acadia Healthcare Corporation is more than $ 6.2 billion. The price per share of ACHC is currently $68.23. The stock has been on a hot trend for the past two years. The stock is expected to increase by 12.4% by 2022.

According to CNN Analysts, 12-month price estimates for ACHA have a median target of $ 84, a maximum target of $ 95, a minimum target of $ 69, and no targets.

8. Advanced Micro Devices (NASDAQ: AMD)

A leading supplier of semiconductors worldwide is Advanced Micro Devices, Inc. The segments of the company are:

Datacenter and professional GPUs, desktop and notebook CPUs and chipsets, discrete and integrated GPUs, and development services are all included in the computing and graphics segment.

Server and embedded processors, semi-custom SoC products, development services, and technologies for game consoles are all included in the enterprise, embedded, and semi-custom market.

Record revenue of $16.4 billion, up 68 percent from 2020, and a gross margin of 48 percent were stated in the company’s recently released annual report for the year 2021.

Furthermore, the business recorded a massive increase in profitability; its net income was $3.2 billion, and its earnings per share were $2.57. Additionally, operating cash flow was disclosed, which increased 229 percent year over year to $3.5 billion. A record $3.2 billion in free cash flow, up 314 percent, was revealed by AMD.

The fiscal year 2022 has a bright future. AMD anticipates a 31 percent increase in sales and a 51 percent increase in gross margin.

The market value of Advanced Micro Devices is $200 billion. The cost of the company’s share is currently $123. According to CNN Money, analysts predict that the price will reach a top of $246, a minimum of $100, and a median target price of $156 during the next 12 months.

8. PepsiCo Inc (PEP)

Food and beverage manufacturing is what PepsiCo does. In more than 200 nations and territories worldwide, people use its goods more than one billion times daily.

In addition to Frito-Lay, Gatorade, Pepsi-Cola, Quaker, Tropicana, and SodaStream, PepsiCo owns many food and beverage brands. Twenty-three brands with projected annual retail sales of over $1 billion are part of PepsiCo’s product portfolio.

PepsiCo reports first-quarter results for the six months ended March 31, 2022:

• In comparison to the same quarter last year, Net Revenue was said to be $ 16.2 billion, up 9.3 percent.
• Operating profit was $5.3 billion, up 1.27 times from the previous year’s period.
• Net income was $4.3 billion in the same period the prior year, up 1.5 times.
• In comparison to the same quarter the previous year, earnings per share were $3.06 instead of $1.24.

Around $ 224.7 billion is the market capitalization of PepsiCo. Currently, the price of the company’s shares is $162.52. For the previous two years, the stock has been rising. The stock increased by 17.2% in value in 2021. To date, in 2022, the stock has dropped by 6.5 percent.

The 12-month price estimates for PEP, according to CNN Analysts, have a median aim of $ 187, a maximum target of $ 200, a minimum target of $ 160, and no targets.

10. Blackstone (BX)

The world’s largest alternative asset manager is Blackstone. It is a top worldwide investment company that manages money on behalf of pension funds, influential organizations, and private investors.

With $915 billion in assets under management, the corporation has investments in infrastructure, life sciences, insurance, hedge funds, private equity, real estate, and growth equity, among other alternative asset classes. Blackstone supports local economies in addition to helping hundreds of businesses develop.

The total amount of money invested across all asset types as of March 31, 2022, is:

• Real estate: 298 billion dollars
• $268 billion in private equity
• 83 billion dollars in Hedge Fund Solutions
• 266 billion dollars in credit and insurance

Results for Blackstone’s first quarter of 2022 were released. One of Blackstone’s strongest quarters in its 36-year existence was this one.

• Total Revenue was estimated to be $5.13 billion, a minor decrease of 3% from the same time in the prior year.
• According to reports, net income fell by 26% from the same quarter of the previous year to $2.5 billion.

Blackstone’s market value is approximately $128.7 billion. The cost of the company’s share is currently $ 107.63. A large portion of 2020 and 2021 saw the stock rise. The share price nearly doubled in 2021, rising from 64.81 to 129.39 dollars. The pattern of sharing changed in 2022 and began to diminish. The stake has currently decreased by 17% in 2022.

According to CNN Analysts, 12-month price estimates for BX have a median aim of $ 143.5, a maximum objective of $ 180, a minimum target of $ 122, and no marks.

The Bottom Line

Although the covered call trading approach is appealing, there are hazards involved. The businesses above have been chosen based on their aspirations for expansion. The anticipated future growth and the predicted growth price can determine the trade’s unique worth.

Additionally, the company’s financial performance and ongoing operations have been taken into account to ensure that the company is worth taking the risk with a covered call plan.