Below are this week’s Perpetual Income Portfolio Club trades.
I am recommending calls to sell on our uncovered Applied Materials (AMAT) and Gilead Sciences (GILD) shares.
If you are not currently in an AMAT and/or 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.
I am also recommending we sell a Target (TGT) put. The stock is up 12% since delivering a stellar earnings report last week and around 70% in less than four months. While I think shares have room to run, I do not expect them to pull away from $150 until after Labor Day, so we’re going with an in-the-money put.
Note that no action is needed on our Chewy (CHWY) Aug Week Four (8/28) 50 Call at this time. We may roll the position later this week.
AMAT Uncovered Shares
Current Stock Price: $63.89
Action: Sell to open the AMAT Aug Week Four (8/28) 64 Call (If you are new to the position, you must buy 100 shares of AMAT for every call you plan to sell.)
Current Option Price: $0.67-$0.71
Recommended Limit: Set initial limit order at $0.69
GILD Uncovered Shares
Current Stock Price: $65.98
Action: Sell to open the GILD Aug Week Four (8/28) 67 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: $0.25-$0.27
Recommended Limit: Set initial limit order at $0.26
Current Stock Price: $153.01
Action: Sell to open the TGT Aug Week Four (8/28) 152.50 Put
Current Option Price: $1.12-$1.17
Recommended Limit: Set initial limit order at $1.14
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, CHWY, GILD and TGT.