The latest edition of the Tackle 25 for 2016 is being released tomorrow morning and is better than ever. While the Tackle 25 is not a long term fundamental or technical list, we certainly took those forms of analysis in mind when selecting the 25 stocks placed on Tackle Trading’s list of best covered call stocks. The Coaches at Tackle Trading believe in monthly cash flow as wealth creation is a byproduct of the compounding of the gains on monthly cash flow. We are not necessarily concerned with profit or loss as the writing of the call will offset any downward pressure in price over time.

The covered call is the financial markets version of the real estate rental agreement. Whereas in a rental agreement the investor will find a property to invest in and create monthly cash flow through renting out the property. The covered call is similar in that an investor will find a different asset class called a stock and create monthly cash flow through selling calls options against the stock that is owned.

In creating the list Tackle Trading took into account the following: PE ratios, PEG, Earnings Growth, Earnings Projections, ROE, Profit Margins, Market Cap, Volume in both the stock and options, technical trends and many other factors. However, the list is primarily a covered call list with one of the most important criteria being that of Cash Flow Expectation (CFE) which is the combination of the 12 month average dividend and the cash flow received from the selling of the call options. One last criteria is that of ROID. This is an indicator that I created for credit based trades to compared two different credits. It takes into account both the ROI on the credit in comparison to the delta which determines probability. ROID has been expanded to also include naked puts, covered calls, short strangles, and all credit spreads.

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