It’s been tough lately for Biotech, Pharmaceutical, and Medical Supply and Services companies. A few earnings misses this past week, led to overall sector dips. Amgen dropped almost 10% on Friday, closing at $145.18. This piqued my interest in selling an Amgen cash secured put.
I saw this dip as an opportunity to sell puts in the space. I already own 100+ shares of Gilead Sciences, and I have two open options with Gilead. I also had a AbbVie put assigned to me, so 100 shares there too. I didn’t want more exposure to either stock. So I took a shot with Amgen. I sold an Amgen cash secured put.
Amgen Cash Secured Put Details
Amgen dropped 10%, which opened up the options market. I was able to sell a put with a strike price of $135 with a decent premium. The details of the Amgen Cash Secured Put are:
- Contract length: 21 Days
- Fees :$6.46
- Strike Price: $135.00
- Premium: $1.50
- Annualized Rate of Return: 18.66%
- Potential Profit: $143.54
This is a short, 21 day cash secured put. It’s a little tricky because we’ll go through a presidential election during this option. Biotech has been effected by commentary from both parties. This could lead to a price drop. Also, the sector is pretty volatile right now. Even with these concerns, I’m happy with a sizable downside. My breakeven is $133.50. If Amgen slides below this price, I’ll take the shares and sell covered calls for a while.