We accepted shares in a number of positions last week. As I said, the math of selling calls simply makes more sense in the current market environment than continuing to roll the puts. Not only will we be able to collect cash, but we can capture potential appreciation when the market recovers.
The goal will be to generate a minimum of a 0.5% cash return on these positions. However, we may accept a lower cash rate of return if I believe there is significant potential for short-term appreciation.
I am recommending calls to sell on Advanced Micro Devices (AMD), Taiwan Semiconductor Manufacturing (TSM) and Walgreen-Boots Alliance (WBA).
Semiconductor stocks including AMD and TSM have been caught up in the broader tech wreck. The global chip shortage persists, with some in the industry predicting it could extend beyond this year amid record demand for chips.
In April, Taiwan Semiconductor reported better-than-expected first-quarter earnings on a 36% year-over-year revenue increase. Its second-quarter forecast also exceeded analysts’ expectations.
Advanced Micro Devices delivered an earnings and revenue beat for the first quarter, as well, reporting record results with sales up 71% year over year. And analysts have been revising their estimates higher for the current quarter.
WBA has sold off with the broader market this year despite beating Wall Street’s earnings estimates over the past few quarters. The largest drugstore chain in the United States has been expanding its primary health care offerings, which I see as a huge growth avenue and a way to hang onto its pandemic-related market share gains.
Walgreens is expected to announce earnings on June 30, and another beat could send shares higher.
Note that these trades are only for members who already own shares uncovered from previous positions.
AMD Uncovered Shares
Note: No action is needed on the AMD Jun Week Four (6/24) 75 Put at this time.
Current Stock Price: $85
Cost Basis: $118.07
Action: Sell to open the AMD Jul Week One (7/1) 88 Call for around $1.78, but adjust as needed to sell a call today
New Cost Basis: $116.29
TSM Uncovered Shares
Note: No action is needed on the TSM Jun Week Four (6/24) 80 Put at this time.
Current Stock Price: $85.65
Cost Basis: $123.72
Action: Sell to open the TSM Jul Week One (7/1) 87 Call for around $1.18, but adjust as needed to sell a call today
New Cost Basis: $122.54
WBA Uncovered Shares
Note: No action is needed on the WBA Jun Week Four (6/24) 38 Put at this time.
Current Stock Price: $40.60
Cost Basis: $47.18
Action: Sell to open the WBA Jul Week One (7/1) 42 Call for around $0.60, but adjust as needed to sell a call today
New Cost Basis: $46.58