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OIB Trade Alert: GILD, GM, MU

We were assigned shares of Gilead Sciences (GILD) last week, so I am recommending a call to sell today. Note that this recommendation is only for people who already own shares of the stock from a previous position.

I am also recommending we book profits on our General Motors (GM) put. While we will be giving back some cash to do so, we have a large profit on the table. Closing now will yield an excellent rate of return.

Finally, I am recommending we roll our Micron Technology (MU) put to a higher strike simply to generate more cash.

GILD Uncovered Shares

Current Stock Price: $63.55

Cost Basis: $66.08

Action: Sell to open the GILD Mar Week One (3/5) 65 Call

Current Option Price: $0.51-$0.60

Recommended Limit: Set your initial limit order at $0.55, but adjust as needed to sell a call today

New Cost Basis: $65.53

Expiration: After the close on Friday, March 5

Potential Rate of Return: I am targeting breakeven for this position

GM Feb Week Four (2/26) 52 Put

Current Stock Price: $51.74

Cash in Hand: $1.73

Action: Buy to close the GM Feb Week Four (2/26) 52 Put

Current Option Price: $0.77-$0.81

Recommended Limit: Set your initial limit order at $0.79, but adjust as needed to close today

Profit: $0.94, or $94 per contract

Rate of Return: 1.8% in 15 days, or 44% on an annualized basis

MU Feb Week Four (2/26) 83.50 Put

Current Stock Price: $89.02

Cash in Hand: $0.61

Action:

  • Buy to close the MU Feb Week Four (2/26) 83.50 Put for around $0.17
  • Sell to open the MU Mar Week One (3/5) 85 Put for around $1.31
  • Set your initial credit limit at $1.14, but adjust as needed to roll today

New Cost Basis: $1.75

Expiration: After the close on Friday, March 5

Potential Rate of Return: 2.1% in 11 days, or 70% on an annualizes basis, if this option expires worthless

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