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I am recommending we roll our Chewy (CHWY) and Gilead Sciences (GILD) calls.
CHWY has found some strength and is back above $55. Premiums are so large we can roll to a higher strike price and pick up some cash as we do so.
GILD continued its slide this week, but premiums remain high and I see the stock as grossly undervalued. We’re going to roll out one week and to a lower strike to pick up more income.
CHWY Sep Week Four (9/25) 52.50 Call
Current Stock Price: $56.21
- Buy to close the CHWY Sep Week Four (9/25) 52.50 Call for around $3.70
- Sell to open the CHWY Oct Week One (10/2) 53 Call for around $3.87
- Set your initial credit limit at $0.17, but adjust as needed to roll today
GILD Sep Week Four (9/25) 64 Call
Current Stock Price: $61.87
- Buy to close the GILD Sep Week Four (9/25) 64 Call for around $0.01
- Sell to open the GILD Oct Week One (10/2) 63.50 Call for around $0.38
- Set your initial credit limit at $0.37, 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 Sep Week Four (9/25) 57.50 Call
Applied Materials (AMAT) is holding up well despite continued weakness in the tech sector. I believe traders and investors have begun to differentiate between overbought, high-P/E stocks and those that offer value. This should provide more stability for undervalued chip stocks.
AMAT is trading right at our call’s strike price. If it closes below it, the call will expire worthless and we will sell another one next week. If it closes above $57.50, our shares will be called away and we will sell a put next week.
Current Stock Price: $57.19
Action: Watch call expire
TGT Sep Week Four (9/25) 152.50 Put
Target (TGT) has been firing on all cylinders throughout the coronavirus pandemic. Consumers are flocking to its stores and digital sales are soaring.
Our put is currently on track to expire worthless. If it does, we will sell another one next week. If it closes below the put’s strike, we will accept shares and sell a call next week.
Current Stock Price: $152.91
Action: Watch put expire
Disclosure: I have positions or trade in and out of AMAT, CHWY, GILD and TGT.