Our Chewy (CHWY) call expired worthless on Friday, so I am recommending another one to sell today.
If you do not currently have a CHWY position, you can enter one now. 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.
Last week, our Corning (GLW) put expired worthless and our Starbucks (SBUX) shares were called away. However, I am holding off on recommending new put positions on these stocks.
With GLW, the bid/ask spreads are too wide. I am waiting to see if volume picks up. If it does now, we may end up swapping GLW out for another stock.
That may also be the case for SBUX, which is not currently throwing off acceptable premiums.
Note that no action is needed on our Apple (AAPL) Apr Week Two (4/9) 125 Call at this time.
Current Stock Price: $79.55
Action: Sell to open the CHWY Apr Week Two (4/9) 84 Call (If you are new to the position, you must buy 100 shares of CHWY for every call you plan to sell.)
Current Option Price: $0.71-$0.86
Recommended Limit: Set your initial credit limit at $0.78
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, CHWY, GLW and SBUX.