Since hitting an all-time high of $59.30 on Tuesday, Chewy (CHWY) is down more than 9%. I want to see if the stock continues to fall before spending cash to capture appreciation. So, I am recommending we roll our call out one week but stick with the 49 strike.
If you are not currently in a CHWY position, please do not enter one at this time. I will alert you when it is time to initiate a position.
Current Stock Price: $53.84
- Buy to close the CHWY Aug Week One (8/7) 49 Call for around $4.80
- Sell to open the CHWY Aug Week Two (8/14) 49 Call for around $5
- Set your initial credit limit at $0.20, 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 Aug Week One (8/7) 64 Put
Applied Materials (AMAT) is down slightly for the week but has been in a strong uptrend off the March lows. I see the chip sector in the early stages of an upgrade cycle that should lock in growth for the next two to four years. Fortunately, more and more people on Wall Street seem to agree with this assessment.
The stock has put in a short-term trading range with a bottom around $62.50. AMAT is currently trading just below our strike price. If it closes below $49, we will accept shares and sell a call. If it closes above that level, our put will expire worthless and we will sell another one.
Current Stock Price: $63.35
Action: Watch put expire
GILD Aug Week One (8/7) 72.50 Call
Gilead Sciences (GILD) announced a manufacturing deal with Pfizer (PFE) to speed up production of Gilead’s COVID-19 treatment remdesivir. The stock gained initially on the news but is now trading flat. Remdesivir sales are actually not a big component of the company’s forecast for Q3 and Q4, but that doesn’t stop investors from selling shares any time there is a headline about a possible coronavirus vaccine. The Pfizer deal could mean Gilead expects remdesivir sales well above the current forecast in 2021.
I believe this incredibly undervalued stock will move back above $70 in the coming days. Our call is on track to expire worthless and we will sell another one next week.
Current Stock Price: $69.07
Action: Watch call expire worthless
TGT Aug Week Two (8/14) 125 Put
Target (TGT) continues to be my favorite retailer and one of the few brick-and-mortar retailers I like. After a nearly 45% run off the stock’s April lows, I expect the $130 level to act as a firm ceiling until earnings come out on Aug. 19.
The stock is trading comfortably above our put’s strike price with a week to go until expiration.
Current Stock Price: $130.99
Action: No action is needed at this time
Disclosure: I have positions or trade in and out of AMAT, CHWY, GILD and TGT.