We have three new positions this week, which I introduced in today’s Perpetual Income Portfolio Club Live Trading Session, including the addition of our newest stock, Apple (AAPL). You can watch a recording of the session here.
What can I say about Apple? How about that it’s the most profitable company in the world? Or that it was the first company to reach a trillion-dollar market cap? Or maybe that its brand has been ranked the most valuable in the world for the past 10 years running.
Apple’s latest fiscal year ended in September. Despite the challenges of the coronavirus pandemic, the company posted record sales, earnings per share and free cash flow.
I have long been a bull on the company, but until recently, Apple’s high share price put it out of reach for our income-generation strategy.
In late August, shares surpassed the $500 level. But that milestone came on the heels of an announcement that the company planned to do a 4-for-1 stock split — the first one in six years for the tech giant.
This new lower share price makes AAPL much easier to trade. Premiums are excellent and I’m excited to welcome it to our Perpetual Income Portfolio Club roster.
For more of my thoughts on AAPL, watch the recording of today’s session here.
Our Applied Materials (AMAT), Chewy (CHWY) and Target (TGT) puts expired worthless on Friday. We are selling new puts on AMAT and TGT today.
CHWY is scheduled to report earnings tomorrow, so we are holding off on trading it until after the announcement.
Current Stock Price: $124.23
Action: Sell to open the AAPL Dec Week Two (12/11) 122 Put
Current Option Price: $0.79-$0.80
Recommended Limit: Set your initial limit order at $0.79
Current Stock Price: $88.68
Action: Sell to open the AMAT Dec Week Two (12/11) 87.50 Put
Current Option Price: $0.85-$0.90
Recommended Limit: Set your initial limit order at $0.87
Current Stock Price: $172.12
Action: Sell to open the TGT Dec Week Two (12/11) 172.50 Put
Current Option Price: $2.09-$2.25
Recommended Limit: Set your initial limit order at $2.17
Note: Option prices tend to move around more than stock prices, so the prices you see when you receive this alert may be different than what I am seeing now. The most frequent concern I hear from members is “missing the trade” — i.e., not getting the limit price I recommend within a few minutes of placing the order.
It is important to be patient with these trades. Begin with my recommended limit for each trade, and if you need to adjust it slightly in a few hours to get in, you can do so.
The Perpetual Income Engine strategy involves selling options every week, so while a few pennies can be important to your short-term return, getting the trade executed is more important over the long run. Use your judgment as to when to adjust the trade after you place your initial order, but give it some time before doing so.
Disclosure: I have positions or trade in and out of AAPL, AMAT, CHWY and TGT.