You create a covered call by buying or owning shares of stock and writing calls on them. By writing the call, you collect the premium but take on the obligation to deliver your stock should the call be exercised.  When we say a call is “attractively priced for covered call writing,” we mean that the premium more than compensates you for the possible risk of having to give up your stock. Over the years, Value Line Options’ covered calls have beaten the major stock indexes by wide margins.  In screening for attractively priced covered calls, we have specified that we are looking for calls that are overpriced (according to the Value Line Options model), and as covered calls, offer premium income in excess of 20% per annum.  We have also specified that the stock could fall as much as 2% at expiration and the investor would still break even. Narrowing our search down to stocks with superior six to twelve month appreciation potential, we came up with a list that included covered calls on some 36 stocks, including those listed below.

Alaska Air Group, Inc. (ALK) owns Alaska Airlines and Horizon Air. Major cities: Fairbanks, Anchorage, Seattle, Portland, Reno, San Francisco, Los Angeles, San Diego, Vladivostok, Guadalajara, Mazatlan, Puerto Vallarta, Mexico City. 2008 revenue mix: passenger, 92%; freight & mail, 2%; other, 6%. Fleet: 101 B-737s, 14 MD-80s, 70 Bombardiers. Labor costs: 40% of revenues. www.alaskaair.com.

Ashland Inc. (ASH) operates five segments: Ashland Hercules Water Technologies, a specialty paper and water chemicals business; Ashland Performance Materials, a specialty resins business; Ashland Aqualon Functional Ingredients, a business that focuses on specialty additives and functional ingredients derived from renewable resources; Ashland Consumer Markets, the Valvoline lubricants and automotive appearance business; and Ashland Distribution, North America's leading distributor of chemicals, plastics, composite materials, etc. www.ashland.com.

Cracker Barrel Old Country Store, Inc. (CBRL) operates 594 restaurants/gift shops in 41 states, mostly in the South and Midwest (5/25/10). Restaurants feature an old country store motif, along with adjoining/separate gift shops, which sell early American reproductions and food items. Nearly all units are company-owned and located along highways. Restaurants accounted for 79.2% of '09 sales; gift shops, 20.8%. www.crackerbarrel.com.

Perrigo Company (PRGO) operates three segments: consumer healthcare makes private-label OTC drugs and nutritional products, 82% FY 2009 sales; Rx produces prescription generic drugs, 8%; and API makes active pharmaceutical ingredients under contract, 7%; other, 3%.  PRGO sells 1,300 store-brand OTC products to over 900 customers. Wal-Mart accounted for 23% of FY 2009 business; foreign customers, 33%. 2009 depreciation rate: 8.7%; R&D, 4.0% of sales. www.perrigo.com.

TRW Automotive Holdings Corp. (TRW) through its subs., supplies automotive systems, modules, & components to automotive original equipment manufacturers & related aftermarkets. Has three segments: Chassis Systems (steering, foundation brakes, brake control, modules, suspension); Occupant Safety Systems (air bags, seat belts, safety electronics, steering wheels, security electronic systems); Automotive Components (body controls, engine valves, engineered fasteners & components). www.trwauto.com.

Valassis Communications Inc. (VCI) is a media company that offers a wide range of marketing services to manufacturers and retailers. In 2009, delivered shared mail packages to about 70 mill. households weekly and free standing inserts to 750 newspapers. Also provides run-of-press (ROP) promotions (printed directly on the pages) in over 13,000 papers, cluster targeted marketing (die-cuts, posters and calendars) and one-to-one marketing. www.valassis.com.