It’s time to take profits on the McKesson January 19, 2018 195 LEAPS Call option (MCK_011918C195) after a major gain.  I recommended its purchase on May 26, 2016 and the long term option gained 43.9% as of the close of trading on July 14, based on the entry price of $17.65.   I still like the underlying stock, which gained 10.56% over the same time period, but this type of huge short term option profit has to be realized, especially in a market which could become volatile over the next few weeks. 

As I noted in my July 11, BTP Flash Alert, I expect some backing and filling in the stock near the $200 area in the short term, especially with an earnings report due out on July 27, which gives us an opportunity to take profits on the LEAPS now.  McKesson Inc. (NYSE: MCK) is the global leader in the medical supply wholesale sector, with over $180 billion in total annual sales.  And despite steady gains of late, few investors are showing much excitement about its prospects, a fact that makes me pretty excited, since I like a good under the radar contrarian stock pick.  I recommended the stock in the premier issue of Breakthrough Tech Profits and it has moved steadily higher since, reaching the upper end of the recommended buy range and having delivered a nice pop recently. 

The company increased its earnings guidance for fiscal year 2017 from $13.43–13.93, up from the previous expectation of $13.30–$13.80 as it continues with its restructuring plan.  McKesson has a history of beating earnings expectations so the guidance upgrade is not out of character. But the stock, and the option have had a good run in the short term and it’s best to lock in profits when you’ve got them, especially in the option.  I still expect to hold on to the stock until 2018 barring unforeseen developments.