Editor’s note: Michael is hosting a Perpetual Income Portfolio Club Live Trading Session Monday, Aug. 3, at noon Eastern.
If you have not already done so, register for the PIPC Live Trading Session here.
Once you have registered, you will receive email reminders from our webinar provider, Zoom, prior to the session with a link to join.
I am recommending we roll our Chewy (CHWY) call out one week, generating more income, rather than allow shares to be called away. The stock is up nearly 5% today in the face of a broader-market decline, but shares have shown fatigue when trying to break $50 in the past. Barring a major move up in the market, I see that level as a short-term ceiling for the stock.
If you are not currently in a CHWY position, you can enter one today. Just be sure to buy 100 shares for every call you plan to sell to make sure your position is covered. Never sell an uncovered call.
In Monday’s Live Trading Session, I plan to spend time reviewing Chewy and the other Perpetual Income Portfolio Club companies with a focus on how things are shaping up for the rest of the year. I hope you can attend.
Current Stock Price: $51.68
Action:
- Buy to close the CHWY Jul Week Five (7/31) 49 Call for around $2.69
- Sell to open the CHWY Aug Week One (8/7) 49 Call for around $3.35
- Set your initial credit limit at $0.66, but adjust if 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 Five (7/31) 60 Put
Applied Materials (AMAT) moved higher this week off support at the $60-$61 level. Announcements by competitors and customers over the past few weeks tell me capital spending on new chipmaking facilities has been hurt little, if at all, by the dramatic slowdown in the U.S. and world economies.
Our put is on track to expire worthless and we will sell another one next week.
Current Stock Price: $63.77
Action: Watch put expire worthless
GILD Aug Week One (8/7) 80 Call
Gilead Sciences (GILD) is selling off following the release of the company’s second-quarter earnings results. Revenue and earnings both fell year over year due largely to pandemic-related issues.
The coronavirus has resulted in many people avoiding their doctor’s office, which has led to fewer hepatitis C screenings and treatmenyt, as well as lower sales of pre-exposure prophylaxis HIV drugs. Additionally, Gilead ramped up spending on research and development to get coronavirus treatment remdesivir to market.
On the bright side, management said it expects a turnaround in the second half of the year, raising its full-year revenue and earnings guidance based on expected demand for remdesivir.
This position does not expire for another week, but I plan to roll the call down to a lower strike in Monday’s Live Trading Session.
Current Stock Price: $69.51
Action: No action is needed at this time
TGT Jul Week Five (7/31) 121 Put
Target (TGT) is moving stealthily yet steadily higher. I still see $120-$121 as a support level that should hold if the market sells off. The company’s earnings report, scheduled for Aug. 19, is the only catalyst on the horizon.
Our put is on track to expire worthless and we will sell another one next week.
Current Stock Price: $124.65
Action: Watch put expire worthless
Disclosure: I have positions or trade in and out of AMAT, CHWY, GILD and TGT.