Dear Triple Play Income Member,
Our ABBV call position expires tomorrow and we can roll it today.
AbbVie (ABBV): 149.11
AbbVie has become a stock market darling. The company continues to raise its dividend each year and despite the price performance, the stock is relatively cheap at a 10.14 forward P/E ratio.
AbbVie stock price is also up when most of the big pharma stocks have been selling off hard. See the chart below where the SPDR S&P Biotech ETF (XBI) is down 32% in the last year and ABBV is up by almost that same amount.
Our short 138 call was run over back in January but we continue to get credit rolling it out since we entered the stock at around 136.50. The ex-dividend date isn’t until the middle of April so we have some time to collect more cash.
Let’s roll our 11 Mar 138 call up to the 1 Apr 139 call for a net credit of around 0.00 to 0.07. Yes, we don’t collect much (if any) premium but we gain $1.00 in capital gains and since our entry price was 136.50, there is at least 2.50 of appreciation if we get called out at expiration.
Let’s do it.
ACTION: Roll the ABBV 11 Mar 138 call to the 1 Apr 139 call for a net credit of around 0.00 to 0.07
Buy to close ABBV 11 Mar 138 call
Sell to open ABBV 1 Apr 139 call
Note: If you are new to Triple Play Income don’t buy the stock at this price. Instead, you can sell a 1 Apr 139 put that is $10 out of the money for around 1.05 to 1.08 that will coincide with our call expiry date. We will then look to sync up around 1 Apr as we see how ABBV trades.
David Durham
Triple Play Income