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Saturday, April 13, 2024

Top Trade Alert – March 7, 2024 – Gilead (GILD)

So Batman asked in yesterday's post about GILD and I still like them enough to make them a Top Trade Alert. Here's what I said to Batman:

GILD is still very cheap. I liked the $75s better because they tend to be more liquid than $72.50s – that’s a consideration down the road if we want to adjust.

The $75s are $8 and the $70s are $10.75 so just on the cusp of a worthwhile roll down. $65s are $13 and that’s $5 to roll down $10 so I’m fine buying the $75s and happy to pay $4 to roll down $10 if GILD takes a dip – hence the $75s.

The current p/e at $72.50 is 10x so $90 is 20% more and 12x – still very cheap so I’m very comfortable with that target.

The $90 calls are $3.65 and the $85s are $4.85 so only $1.20 more to give up $5 is no way and the $95s are $2.65 so only $1 to roll up $5 if things look good (probably $1.50 by then) so why should I spend the extra money now?

As to short puts – the $75 puts are $10.20 and $75 is just over 10x so I certainly don’t mind being assigned at net $65 and the $80 puts are $13 and the $85s are $16 and that would be net $69 so still good and each short put pays for 2 spreads so I kind of prefer the $80s as they’ll roll out to $70 so it’s hard to imagine regretting the spread.

That’s how I come up with it…


Here's Warren 2.0s report on GILD:

🤖 To provide a comprehensive "Good, Bad, and Ugly" report on Gilead Sciences, Inc. (GILD), we'll delve into its financial performance, market position, and future outlook.

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