Dear Triple Play Income Member,
Â
Our ABBV call position expires tomorrow and we can roll it today.
Â
AbbVie (ABBV): 149.11
Â
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.
Â
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.
Â
Â
Â
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.
Â
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.
Â
Let’s do it.
Â
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
Â
Buy to close ABBV 11 Mar 138 call
Sell to open ABBV 1 Apr 139 call
Â
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.
Â
David Durham
Triple Play Income