Take GILD Profits!
Lock in 22% Gainer Now
PLAY: Sell your GILD February 46 Puts (GDQ NT) and GILD February 47 Calls (GDQ BK) at market, good for the day.
Dear Bottarelli Research Member,
As we continue to work for the best exit prices on VMW, we have an interesting situation right now in Gilead Sciences (GILD – NASDAQ). As you know, GILD is set to report earnings after today’s close. That’s why we entered the basket of GILD February 46 Puts (GDQ NT) and GILD February 47 Calls (GDQ BK) for a total price of $2.00.
As I write, GILD is trading lower leading up to this report, which has pushed the value of our puts higher. But oddly enough, the calls have retained their value (which is telling me that market makers are afraid to tick them lower, only to have GILD pop up tomorrow and expose them to big losses). Because of this situation, our basket of GILD calls/puts is now trading for a total price of $2.45, good for a 22.5% winner. To be perfectly honest with you, the way this market has been behaving, I think the most prudent move right now it to lock in these gains in advance of GILD’s earnings report – and eliminate any further directional risk. In other words, take the money and run!
PLAY: Sell your GILD February 46 Puts (GDQ NT) and GILD February 47 Calls (GDQ BK) at market, good for the day.
NOTE: For anyone willing to speculate on a higher return, another possible strategy is sell the GILD puts for around $1.90 (which basically covers the total cost of both positions), and then hold the calls in anticipation of a GILD upside move. If you time things correctly, this maneuver would significantly increase your potential gains. For me, the smart play is to take the 22% gains and run. But for all you cowboys out there, this is another sensible way to maximize your returns. Just something to consider.
And as always…
Lock and load!
Sincerely,
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