Below are this week’s Perpetual Income Portfolio Club trades.
Our Applied Materials (AMAT) put expired worthless on Friday as the stock closed right at our strike. We are selling a new put this week.
We allowed our Chewy (CHWY) shares to be called away, so we are entering a new put position today.
Next, our Gilead Sciences (GILD) call expired worthless. The stock continues to drift lower ahead of the company’s earnings report, which is expected to be released on Oct. 28. I am recommending a call to sell on our uncovered shares this week, but note that we may sit out next week to avoid the earnings announcement.
If you do not currently have a GILD position, you can enter one today. Just be aware that 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.
Finally, our Target (TGT) put expired worthless last week. I expect shares to continue their advance, so I am recommending we sell an in-the-money put for a large chunk of cash.
Current Stock Price: $62.34
Action: Sell to open the AMAT Oct Week Four (10/23) 62 Put
Current Option Price: $0.72-$0.75
Recommended Limit: Set initial limit order at $0.73
Current Stock Price: $68.47
Action: Sell to open the CHWY Oct Week Four (10/23) 67.50 Put
Current Option Price: $1.11-$1.18
Recommended Limit: Set initial limit order at $1.14
GILD Uncovered Shares
Current Stock Price: $60.24
Action: Sell to open the GILD Oct Week Four (10/23) 61 Call (If you are new to the position, you must buy 100 shares of GILD for every call you plan to sell.)
Current Option Price: $0.29-$0.31
Recommended Limit: Set initial limit order at $0.30
Current Stock Price: $165.46
Action: Sell to open the TGT Oct Week Four (10/23) 165 Put
Current Option Price: $1.28-$1.37
Recommended Limit: Set initial limit order at $1.32
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 AMAT, GILD and TGT.