I am recommending we roll our Chewy (CHWY), Gilead Sciences (GILD) and Target (TGT) calls today.
CHWY was hit by profit-taking this week but is bouncing back. Shares are up more than 130% since their March low.
I see $47.50 as a key support level, so I want to roll the position out one week and up in strike. We’ll generate more cash in the process.
Gilead announced pricing for coronavirus treatment remdesivir this week, saying it will charge $3,120 for a full course of treatment for U.S. patients with commercial insurance and $2,340 for those covered under government programs. The company said it will start charging for the drug this month.
The stock did not move a great deal on the news, but support has firmed up at the $75 level. Let’s roll our call out one week to generate more income.
Target (TGT) continues to trade in a tight range between $117 and $122, which is a great thing for us. I am recommending we roll out one week to pick up a big slug of cash.
If you are not currently in the CHWY, GILD and/or TGT trades, you can enter them today by selling the July Week Two calls. Just be sure that you 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.
CHWY Jul Week One (7/2) 47 Call
Current Stock Price: $47.37
- Buy to close the CHWY Jul Week One (7/2) 47 Call for around $0.60
- Sell to open the CHWY Jul Week Two (7/10) 48 Call for around $1.29
- Set your initial credit limit at $0.69, but adjust as needed to roll today
GILD Jul Week One (7/2) 77 Call
Current Stock Price: $76.64
- Buy to close the GILD Jul Week One (7/2) 77 Call for around $0.18
- Sell to open the GILD Jul Week Two (7/10) 77 Call for around $1.09
- Set your initial credit limit at $0.91, but adjust as needed to roll today
TGT Jul Week One (7/2) 120 Call
Current Stock Price: $119.59
- Buy to close the TGT Jul Week One (7/2) 120 Call for around $0.19
- Sell to open the TGT Jul Week Two (7/10) 120 Call for around $1.37
- Set your initial credit limit at $1.18, but adjust as needed to roll today
And here’s where we stand with our other Perpetual Income Portfolio Club position heading into the weekend.
AMAT Jul Week One (7/2) 58 Call
Applied Mateials (AMAT) is trading far enough above the strike price of our call that it makes more sense to allow our shares to be called away than to roll the position. We will sell a put on the stock next week.
Current Stock Price: $60.50
Action: Allow shares to be called away
Disclosure: I have positions or trade in and out of AMAT, CHWY, GILD and TGT.