An anonymous reader says, My question is what stocks should we use for the covered call strategy? As we all know, even blue chip stocks such as LEH and AIG could go down.

This is a fantastic question. (Yes, even blue chip stocks can decline in value, so this is a legitimate concern.)

And yet unfortunately it is a question I cannot answer definitively here on this blog. Heres why

The best stocks for covered call writing are always changing. They are not the same from month to month. So I cant say, Go write covered calls on RIMM and expect that advice to still be good even four weeks from now.

The better question is, What kinds of stocks are best for executing a covered call writing strategy?

Answer: The best kind of stocks for writing covered calls are either channeling or appreciating moving sideways or going up in price.

If a stock is channeling, chances are you will be able to collect a premium and keep your stock.

Better yet, if a stock is appreciating, you will be able to collect a premium and sell your stock at a profit so that youre in a no-risk all-cash position until the next time you write a covered call.

Obviously, it is harder to find such stocks in a market when most prices are falling. In some ways, its like trying to find a needle in a haystack.

It is always easier to find good covered call candidates in a bull market than a bear market. And yet even in a bear market there are still good stocks that are ripe for using this strategy.

This is one reason I have developed the Black Box Easy Money System (which is about to be released on Thursday, January 29). It is a tool that automatically generates a list of potential covered call writing candidates every single month.

Furthermore, it tells you:

• Which stock to buy
• Which call option to sell
• Which put to buy (as insurance)
• % Return if exercised
• Break even return %
• Maximum dollar risk
• Maximum percentage risk

This way, you can scan the list of potential covered call writing candidates once a month and quickly make a good decision.

To show you how this process works, Ive created a series of free videos. And Ive even thrown in a couple bonus gifts. If you havent signed up yet (its free), I recommend you do so here: