We still have several positions where stock prices are trading above our covered call strikes. Let’s review and manage several of those positions.
Cardinal Health (CAH): 68.85
Cardinal Health is delivering stronger EPS performance and the stock price in the last 20 days has traded higher. We entered the stock at 61.58 and our 19 Aug 62.50 call is in the money. The stock has run too far to roll it up for a credit. We will let the stock be called away this weekend, keeping our premium and approximately 0.92 of capital gains.
ACTION: No Action. Allow CAH stock to be called away.
DOW Inc. (DOW): 55.95
Dow Inc. stock price has been on a nice run as well. We thought it might retrace so that we could roll our calls out and up but the price has held firm.
DOW goes ex-dividend on 8/30/22. Let’s roll our 19 Aug 54 call out one week for a smaller credit. If the price retraces, we can let the call expire worthless next Friday. If not, we will let the stock get called out and buy the stock again the following Monday ahead of the ex-dividend date.
ACTION: Roll the DOW 19 Aug 54 call to the DOW 26 Aug call for a net credit of around 0.28 to 0.32 and a 0.5% return
Buy to close DOW 19 Aug 54 call
Sell to open DOW 26 Aug 54 call
If you do not own DOW stock or the 19 Aug 54 call at this time, do not make this trade. We will have a chance to get into the stock before the ex-dividend next week.
Gilead Sciences (GILD): 64.74
Gilead Sciences stock price has traded higher similar to our DOW position. We can’t roll the call up without paying a debit so let’s roll it out two weeks at this strike and collect a reasonable premium.
TRADE ACTION: Roll the GILD 19 Aug 63 call to the GILD 2 Sep 63 call for a net credit of around 0.45 to 0.50 and a 0.7% return
Buy to close GILD 19 Aug 63 call
Sell to open GILD 2 Sep 63 call
If you do not own GILD stock at this time, do not make this trade.
Vale S.A. (VALE): 13.12
We have a 19 Aug 14.50 call expiring tomorrow. Let’s roll it out 3 weeks to capture a 1% return.
ACTION: Roll the VALE 19 Aug 14.50 call to the VALE 9 Sep 14.50 call for a net credit of around 0.14 and a 1% return.
Buy to close VALE 19 Aug 14.50 call
Sell to open VALE 9 Sep 14.50 call
If you do not own VALE stock at this time, you can buy the stock and sell the 9 Sep 14.50 call for a net credit of around 0.14
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