Our Gilead Sciences (GILD) call expired worthless on Friday, so I am recommending another one today. The goal is to continue generating short-term cash while we await the longer-term catalyst of more clinical trial results for Gilead’s coronavirus treatment remdesivir.
If you are not currently in a GILD position, you can enter one today. Just be aware that you will need to 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.
Note that no action is needed on our Applied Materials (AMAT) Sep Week Four (9/25) 57.50 Call, Chewy (CHWY) Sep Week Four (9/25) 52.50 Call or Target (TGT) Sep Week Four (9/25) 152.50 Put at this time.
Current Stock Price: $63.79
Action: Sell to open the GILD Sep Week Four (9/25) 64 Call
Current Option Price: $0.45-$0.49
Recommended Limit: Set initial limit order at $0.47
Note: Option prices tend to move around more than stock prices, so the prices you see when you receive this alert may be different than what I am seeing now. The most frequent concern I hear from members is “missing the trade” — i.e., not getting the limit price I recommend within a few minutes of placing the order.
It is important to be patient with these trades. Begin with my recommended limit for each trade, and if you need to adjust it slightly in a few hours to get in, you can do so.
The Perpetual Income Engine strategy involves selling options every week, so while a few pennies can be important to your short-term return, getting the trade executed is more important over the long run. Use your judgment as to when to adjust the trade after you place your initial order, but give it some time before doing so.
Disclosure: I have positions or trade in and out of AMAT, CHWY, GILD and TGT.