We accepted shares of Target (TGT) on Friday, so I am recommending a call to sell against them today.
TGT continues to pull back this week, but the company is flourishing. I expect the runup in the stock to continue following a brief pause.
If you are not currently in a TGT position, you can enter on 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.
Our Gilead Sciences (GILD) call expired worthless last week. With the company expected to report earnings tomorrow, I am holding off on recommending a new call until after we see how investors respond to the announcement.
Note that no action is needed on the Applied Materials (AMAT) Oct Week Five (10/30) 62 Put or Chewy (CHWY) Nov Week One (11/6) 67.50 Put at this time.
Current Stock Price: $157.16
Action: Sell to open the TGT Oct Week Five (10/30) 160 Call (If you are new to the position, you must buy 100 shares of TGT for every call you plan to sell.)
Current Option Price: $0.59-$0.65
Recommended Limit: Set initial limit order at $0.62
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.