The market’s momentum continued last week as a benign inflation print and another round of solid earnings backed up bullish sentiment—with virtually all of the major indexes moving higher. For the week the S&P 500 rose 0.7%, the Dow Jones Industrial Average advanced 0.8%, the Nasdaq Composite jumped 2.2%, but the Russell 2000 slipped 1.4%.
The Stock – Guardant Health (GH)
Guardant Health has always had a great story, though its lack of profits, fears of some competition and innovation in the sector held it back. But we think a fantastic and growing set of core offerings, as well as a new test that’s growing like mad (and its Q3 report), has changed investor perception (and hopefully leaves the incessant volatility behind—see more below).
The firm is mostly about liquid biopsy tests, which are able to provide massive insights just from a couple tubes of blood. The flagship offering is its 360 platform that can guide treatment decisions for those with various cancers and diseases, which is especially valuable for inconclusive (or impossible to get) biopsies. (It also offers tissue-based analysis, adding it to the blood results.)
There are also tests under the Response brand (to see how a patient is doing with a current treatment) and Reveal brand (to track a patient after treatment to see if any cancer has returned). Perhaps the most exciting test is Shield, the first FDA approved blood screening test for colorectal cancer, which is obviously a massive improvement over stool-based tests. Just launched a year ago, Shield processed 24,000 tests in Q3, up from 16,000 in Q2 and 9,000 in Q1, with big growth ahead as it collaborates with some big testing players (like Quest Diagnostics). Plus, the company is aiming to make Shield a true multi-cancer detection test, with large-scale real-world data being collected now for a few tumor types.
When looking at the entire portfolio, Guardant’s test volume growth has accelerated five quarters in a row (up 40% in Q3) with revenue growth doing the same, while gross margins are headed higher (up three percentage points from a year ago); earnings are still deep in the red, and this remains a negative, but with management having tons of new tests and expansion-related irons in the fire, the odds are growing that Guardant is going to be a much, much bigger company down the road.
Technical Analysis
GH has been a bucking bronco for months, with sharp moves up over a few weeks often followed by sharp pullbacks. But we’re thinking perception may have finally changed for the better, with big investors stepping up. After hacking sideways in a big range from late January to early August, the stock did break out nicely, only to see a sharp two-week dip in September. But the 50-day line held, GH pushed higher—and then last week’s earnings gap was decisive, both price- and volume-wise (all-time record weekly volume). Stop – 76
The Covered Call Trade
Buy Guardant Health (GH) Stock at 98, Sell to Open November 95 Strike Calls (exp. 11/21) for $6, or a Net Price of 92 or less
Static Return: $300 per covered call (3.26%)
Breakeven: 92
Covered Call Return (if assigned): $300 per covered call (3.26%)
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 the approximate Net Price, or 92 or less. (In this case, 98 minus 6 = 92. Or, another example is you could pay 98.5 for the stock and sell the call for 6.50, which also equals 92.)
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 Symbol | Price Bought | Current Stock Price | Stop | Option - Price of Call Sold | Current Option Price |
| Century Aluminum (CENX) | 30.65 | 29 | 24 | November 31 -- $3 | $2 |
| Nextracker (NXT) | 85.8 | 97 | 70.5 | November 80 -- $10.80 | $17 |
| Celsius (CELH) | 64.35 | 58 | 54 | November 64 -- $5.45 | $2 |
| Applied Digitial (APLD) | 36 | 30 | 24.5 | November 35 -- $5 | $2 |
The next Cabot Profit Booster issue will be published on November 11, 2025.
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