James Stewart says it's time to buy Valero and write covered calls

James Stewart is one of the best investment minds in the world, and he thinks Valero (NYSE: VLO) is a good buy. Valero is the largest refiner in North America and Stewart, like many great investment minds, thinks gas prices are likely to remain quite high. He thinks Valero is the best way to play this, and it even makes him feel better about paying outrageous prices to fill up his car:

Still, my costly trips to the gas station have had a silver lining, especially since I've made a point to patronize Valero Energy... Not only does Valero tend to undercut its competitors by a few cents a gallon, but I own Valero stock. Watching the dollars and cents spin by on the pump, I at least have the satisfaction of knowing that some of that will be returning to my pocket in the form of dividends or higher prices for Valero shares.

Most interestingly for investors, Stewart suggests using the strategy of writing covered calls. While options trading is normally too risky and complex for most individual investors, covered calls can be an effective strategy for locking in profits.

Schaeffer's Investment Research has an excellent primer on covered calls, and more experienced investors may want to look into this strategy.