Please ensure Javascript is enabled for purposes of website accessibility
Profit Booster
Make Money 3 Ways from Great Growth Stocks

Cabot Profit Booster Issue: January 28, 2025

Despite some wobbles early in January, the S&P 500 closed at a new all-time high on Thursday. And even though the indexes pulled back marginally on Friday, by week’s end the S&P 500 had gained 1.7%, the Dow had rallied 1.83% and the Nasdaq had added 1.53% (though the Nasdaq got hit again on Monday, led lower by AI stocks).

Despite some wobbles early in January, the S&P 500 closed at a new all-time high on Thursday. And even though the indexes pulled back marginally on Friday, by week’s end the S&P 500 had gained 1.7%, the Dow had rallied 1.83% and the Nasdaq had added 1.53% (though the Nasdaq got hit again on Monday, led lower by AI stocks).

The Stock – Guardant Health (GH)

Timing is very important in the stock market, as the same company with mostly the same products can see its stock languish for many quarters—until investor perception changes, which can kick off a sustained advance as big investors decide to build positions.

We’ve written about Guardant Health twice in recent months, but the stock couldn’t continue higher, but now we’re thinking shares have finally turned the corner. The firm has long been a big player in a huge but still developing market of liquid biopsies, with its Guardant 360 platform helping analyze DNA (via a couple tubes of blood) in patients with advanced solid tumors to better guide treatment options or even provide monitoring of current treatments—that business has been growing steadily.

But this year should see an uptake in Sheild, which is the firm’s blood-based colorectal cancer test approved by the FDA (as a primary screening option) last June that has been shown to have similar detection capabilities as stool-based tests (like Cologuard). And then, just a couple of weeks ago, the firm’s Reveal test, which is a test that can better predict cancer recurrence, essentially got Medicare approval for certain colorectal cancer patients, which itself is big but also opens the door to broader approval for other cancers. (The company thinks just 3% of the potential 18 million patients that would benefit from this sort of testing in a variety of areas are being tested.)

To be fair, estimates here are just OK, with sales growth expected to rise just 17% this year while the bottom line is deep in the red, but those could prove conservative if Sheild and Reveal pick up steam. It’s a bit speculative given the numbers, but the story is enticing.

Technical Analysis

GH imploded during the bear market and actually didn’t bottom until April of last year when shares had a nice rally thanks to the Sheild approval … but that move went up in smoke, with shares falling sharply into October. Then the Q3 report in October brought another round of buying, with the stock briefly tagging 15-month highs. And while shares did dip from there, the retreat wasn’t nearly as severe as the prior one, and now we see the buyers really flexing, with GH ripping to multi-year highs after the Reveal news. Stop – 36.5

GH.png

The Covered Call Trade

Buy Guardant Health (GH) Stock at 47, Sell to Open February 50 Strike Calls (exp. 2/21) for $2, or a Net Price of 45 or less

Static Return: $200 per covered call (4.44%)

Breakeven: 45

Covered Call Return (if assigned): $500 per covered call (11.11%)

Please note, the stock and options prices will be moving throughout the day, so these prices are simply an approximation of prices that you should be able to achieve.

However, the important component of this equation is that the stock price paid, minus the premium received via the call sale, equals approximately the Net Price, or 45 or less. (In this case 47 minus 2 = 45. Or another example is you could pay 47.25 for the stock and sell the call for 2.25, which also equals 45)

For every 100 shares of stock you buy, you can sell 1 call. For every 200 shares of stock you buy, you can sell 2 calls. And so on …

Open Positions

Stock Name and SymbolPrice BoughtCurrent Stock PriceStopOption - Price of Call SoldCurrent Option Price
Rubrik (RBRK)657156February 70 -- $3$4.50
Robinhood (HOOD)42.754833.5February 42 -- $4.75$7.00
Cloudflare (NET)121.15128107February 120 -- $8.50$13.00


The next Cabot Profit Booster issue will be published on February 4, 2025.


Copyright © 2025. All rights reserved. Copying or electronic transmission of this information without permission is a violation of copyright law. For the protection of our subscribers, copyright violations will result in immediate termination of all subscriptions without refund. Disclosures: Cabot Wealth Network exists to serve you, our readers. We derive 100% of our revenue, or close to it, from selling subscriptions to our publications. Neither Cabot Wealth Network nor our employees are compensated in any way by the companies whose stocks we recommend or providers of associated financial services. Employees of Cabot Wealth Network may own some of the stocks recommended by our advisory services. Disclaimer: Sources of information are believed to be reliable but they are not guaranteed to be complete or error-free. Recommendations, opinions or suggestions are given with the understanding that subscribers acting on information assume all risks involved. Buy/Sell Recommendations: are made in regular issues, updates, or alerts by email and on the private subscriber website. Subscribers agree to adhere to all terms and conditions which can be found on CabotWealth.com and are subject to change. Violations will result in termination of all subscriptions without refund in addition to any civil and criminal penalties available under the law.

Jacob Mintz is a professional options trader and editor of Cabot Options Trader. Using his proprietary options scans, Jacob creates and manages positions in equities based on unusual option activity and risk/reward.