Gilead Sciences (GILD) is a favorite stock of mine. As biopharmaceutical company, GILD develops and sells drugs aimed at treating HIV and HepC primarily....however, also, as of recent Covid-19 via remdesivir. GILD's recent acquisitions have it poised to expand its footprint into oncology with time.
GILD carries a solid dividend of 4.47% annually (i.e. $0.68 per share per quarter), and trades at a very cheap valuation (once adjustments are made for one-time costs).
With that said, GILD seems like a no-brainer investment; however, the stock has had a choppy ride this year. It started in the mid-60s, shot to the mid-80's on the covid-19 treatment news, and then fell back to the 60 range currently.
Being a long-term owner of GILD, I have owned shares throughout 2020; selling none, and adding slightly to my position here and there. However, despite the stock price's 7.91% decline this year, I am actually up 29.17% this year!
Well, in addition to owning the shares and collection the quarterly dividend, I also trade calls around my position (i.e. a modified covered call strategy). Specifically, I tend to favor selling the weekly GILD calls against my position to pocket a weekly premium. It the stock's price runs over the strike price, I simple roll the covered call up and out in duration. Or in other words, I buy back the call option I sold and sell another call option at a higher strike and further out expiration date; such that, overall, I either break even or make a moderate profit. All my trades are tracked on my GILD covered call page - https://www.emriches.com/gild-covered-call - in case you are curious.
Overall, my stats for the year thus far are:
- Dividends: $204.00 or 3.09%
- Option Premiums: $2,244.00 or 33.99%
- Stock Appreciation: -$522; -7.91%
- Overall Gain: $1,926.00; 29.17%
Initially, my goal in tracking my progress was to gain data to either support or invalidate the concept of pursuing a covered call overtime...through several fluctuations in the share price. Overall, I must say...this modified covered call strategy is an investment strategy all income seeking investors should consider.
- One item to note; during the initial weeks and months of of the Covid-19 pandemic, the implied volatility on GILD was immense. Therefore, covered call premiums obtained during this time were 3-5 times greater than usual. But then again, so was the stock price volatility...