I am recommending we roll our Chewy (CHWY) and Gilead Sciences (GILD) calls today.
CHWY is selling off after a big advance this week but remains above the strike price of the call we sold. Rather than letting our shares get called away, let’s roll our position out one week. I like the amount of premium we can generate and expect the stock to remain in a $47.50 to $52.50 trading range.
GILD is rallying today after the company published new analysis about the effectiveness of coronavirus treatment remdesivir. A Phase III study suggests a 62% reduction in mortality rates for patients treated with remdesivir. It also showed that 74% of patients recovered within two weeks. We’re rolling out one week and to a higher strike.
If you are not currently in the CHWY or GILD trades, you can enter them today by selling the July 17 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 Two (7/10) 48 Call
Current Stock Price: $49.12
- Buy to close the CHWY Jul Week Two (7/10) 48 Call for around $1.17
- Sell to open the CHWY Jul Monthly (7/17) 48 Call for around $2.33
- Set your initial credit limit at $1.16, but adjust as needed to roll today
GILD Jul Week Two (7/10) 77 Call
Current Stock Price: $76.39
- Buy to close the GILD Jul Week Two (7/10) 77 Call for around $0.30
- Sell to open the GILD Jul Monthly (7/17) 78 Call for around $0.89
- Set your initial credit limit at $0.69, but adjust as needed to roll today
And here’s where we stand with our other Perpetual Income Portfolio Club positions heading into the weekend.
AMAT Jul Week Two (7/10) 62.50 Put
Applied Materials (AMAT) bounced around our strike this week. The put is currently on track to expire worthless. If it does, we will sell another one. If the stock closes below $62.50, we will accept shares and sell a call next week.
Current Stock Price: $62.74
Action: Watch put expire
TGT Jul Week Two (7/10) 120 Call
Target (TGT) has fallen back after hitting the $120 level, as I expected it would, retreating to $117 support. Our call is on track to expire worthless and we will sell another one next week.
Current Stock Price: $117.65
Action: Watch call expire worthless
Disclosure: I have positions or trade in and out of AMAT, CHWY, GILD and TGT.