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AbbVie (ABBV) certainly had a wild ride since we wrote the covered calls on the shares. At one point, it was looking like the shares were going to breach our strike of $111 - at which point, we would’ve been giving over the shares. Though that is always a possibility. It wouldn’t have been a terrible outcome considering it would finally have realized our gains.
(Source - Google Finance)
Well, the FDA had other plans. The FDA extended a review of “Rinvoq in the treatment of adult patients with active psoriatic arthritis” by three months. At least it wasn’t an outright rejection. Still, it adds some uncertainty as Rinvoq is one of the top candidates to start replacing the company’s reliance on Humira. They have been making strides towards this but 2023 will come before we know it. That is when the patent drops off in the U.S. market and allows others to make biosimilars.
In other news, ABBV is also looking at selling $5 billion in women’s drug portfolio. Though that didn’t seem to be a huge market-moving announcement. As far as why they are wanting to sell it, other sources have mentioned wanting to pay down debt. Perhaps just not in their core strategy going forward too.
This now locks us in with collecting $2.61 in premium and still owning the shares. Therefore, the next move will be to write some more covered calls when the opportunity arises. At this point, we could be waiting a while as the call premium is likely not going to look too appealing around the $110+ strike prices that we are looking at.
(Source)
Disclosure: Long ABBV
This is not investment advice but for entertainment purposes only. Any decision to buy or sell is solely made by that individual. Speak with a financial professional to develop an investing plan that is right for your own objectives and goals.