The table below contains the companies that Signalee believes are the best stocks for covered call writing. We start with every company in the S&P 100, which tend to be the largest and most established companies in the United States and represent almost 51 percent of the market capitalization of the entire US equity markets. These companies are typically high-quality businesses that have a reason to exist and are likely to be around for the foreseeable future.
We then look at the valuations of each of the S&P 100 companies to see which appear to be trading below our long-term normalized estimate of fair value. If the stock is both below our estimate of long-term normalized fair value and is not exhibiting negative momentum, it makes our list of the best stocks for covered call writing. However, the normal caveat emptor applies: not all these stocks will generate positive returns when used for a covered call writing strategy and they may not be appropriate investments for your particular situation. Please be responsible and use this list only as a starting point for your own due diligence. If you decide to invest in one of the companies below keep your position sizes small and diversify your portfolio to minimize the risk of ruin.
The table above is refreshed quarterly with updates announced on Signalee’s blog.