I am recommending we roll all four of our Perpetual Income Portfolio Club positions today.
While our Applied Materials (AMAT) put is currently on track to expire worthless, we can generate a large amount of cash by rolling out one week.
Chewy (CHWY) is finding support at the $47 level. With gigantic premiums in the option chains, we can roll our call up $1 in strike and bring in a large chunk of cash.
Gilead Sciences (GILD) has found strong support at $75 but has been unable to break out as investors remain divided over how coronavirus treatment remdesivir will impact the company. Some believe it will be a meaningful contributor to Gilead’s profits while others see headlines about potential vaccines and think this will reduce the need for the drug. It doesn’t really matter to us who is correct. We’re going to keep collecting income by rolling our call out one week and to a lower strike.
We’re also rolling our Target (TGT) call out one week. We got news today that retail sales increased 7.5% in June, which was better than expected, on the heels of May’s 18.2% jump. This is good news for Target, but I think the stock will remain in its $117-$123 trading range until the company announces earnings next month. That report may be the catalyst needed to push the stock to the next level.
If you are not currently in these positions, you can enter them today by selling the July 24 options. However, keep in mind that if you are new to the CHWY, GILD and/or TGT positions, you will need to buy 100 shares of the stock first for every call you plan to sell to make sure your position is covered. Never sell an uncovered call.
Note that since we are managing all of this week’s expiring positions today, I will not be sending a PIPC Update tomorrow.
AMAT Jul Monthly (7/17) 60 Put
Current Stock Price: $61.90
Action:
- Buy to close the AMAT Jul Monthly (7/17) 60 Put for around $0.14
- Sell to open the AMAT Jul Week Four (7/24) 60 Put for around $0.81
- Set your initial credit limit at $0.67, but adjust if needed to roll today
CHWY Jul Monthly (7/17) 48 Call
Current Stock Price: $47.68
Action:
- Buy to close the CHWY Jul Monthly (7/17) 48 Call for around $0.68
- Sell to open the CHWY Jul Week Four (7/24) 49 Call for around $1.45
- Set your initial credit limit at $0.77, but adjust if needed to roll today
GILD Jul Monthly (7/17) 78 Call
Current Stock Price: $76.12
Action:
- Buy to close the GILD Jul Monthly (7/17) 78 Call for around $0.13
- Sell to open the GILD Jul Week Four (7/24) 77 Call for around $1.06
- Set your initial credit limit at $0.93, but adjust if needed to roll today
TGT Jul Monthly (7/17) 120 Call
Current Stock Price: $122.40
Action:
- Buy to close the TGT Jul Monthly (7/17) 120 Call for around $2.60
- Sell to open the TGT Jul Week Four (7/24) 120 Call for around $3.60
- Set your initial credit limit at $1, but adjust if needed to roll today
Disclosure: I have positions or trade in and out of AMAT, CHWY, GILD and TGT.