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Archive for July, 2017

Transunion (TRU): A Stable and Consistent Player

Monday, July 31st, 2017

This week we are discussing another one of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our portfolio’s to find stocks that have displayed consistent upwards momentum and we look to place spreads that take advantage of this underlying strength.

Terry

Transunion (TRU): A Stable and Consistent Player

Several analysts have recently refreshed their bullish outlook towards Transunion.  UBS Asset Management has increased their stake in the company and both Morgan Stanley as well as Deutsche Bank have raised their price targets to $50.

Transunion has been trading higher within a rising trend channel since the middle of February.  After testing the lower line of the trend channel in the past week, the stock recovered to hit a fresh 52-week high.  The $44.45 level held the stock price lower for a month prior to finally breaking above it earlier this month.  The level is now viewed as support and its proximity to the 20-day moving average as well as the channel bottom emphasizes the area as strong support.

 

TRU Chart July 2017

TRU Chart July 2017

*source Tradingview.com

If you concur that there’s further upside ahead for Transunion, consider this trade which is a bet that the stock will continue to advance, at least a little.

Buy To Open TRU 15SEP17 45 Puts (TRU170915P45)
Sell To Open TRU 15SEP17 46 Puts (TRU170915P46) for a credit of $0.46 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when TRU was trading just above  $45.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

If you use our favorite broker for this trade, tastyworks, your commission on this trade will only be $1 per opening contract ($2 per spread) (and there is no commission on closing trades, only the $.10 clearing fee).  Each contract would then yield $44 and your broker would charge a $100 maintenance fee, making your investment $56 ($100 – $44).  If TRU closes at any price above $46 on September 15, 2017, both options would expire worthless, and your return on the spread would be 78% (624% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates July 31, 2017

IBD Underlying Updates July 31, 2017

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  The Terry’s Tips portfolio which places spreads like the above one has gained 114.7% so far in 2017 in spite of incurring some losses on some of the spreads placed.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Macom Tech Solutions (MTSI) Surges to All-Time High, What’s Next?

Monday, July 24th, 2017

This week we are featuring a company listed on the Investor’s Business Daily (IBD) Top 50 List that broke to an all-time high in the past week.  In one of our portfolio’s, we use the IBD Top 50 List to find stocks that show strong upward momentum and place spreads which will profit if the upward momentum continues.  Actually, the stock can even fall a little for the maximum gain to be realized on these spreads.

Terry

Macom Tech Solutions (MTSI) Surges to All-Time High, What’s Next?

Macom Technology Solutions had its price target recently raised by Needham & Company and several firms have added to already sizeable positions.  Here are two of them-  First Trust Advisors LP Increases Stake in Macom Technology Solutions Holdings and FMR LLC Boosts Position in Macom Technology Solutions Holdings.

MTSI has been in an uptrend since late 2012 and broke to an all-time high in the past week.  The technical break followed an 8-week consolidation below a horizontal resistance level at $61.25 which is now viewed as strong support.  MTSI surged above the level on Thursday and held near its highs into the weekly close to offer confirmation of a sustained bullish break.

MTSI Chart July 2017

MTSI Chart July 2017

*source Tradingview.com

If you concur that there’s further upside ahead for Macom Technology Solutions, consider this trade which is a bet that the stock will continue to advance, or at least not decline very much over the next four weeks.

Buy To Open MTSI 18Aug17 55 Puts (MTSI170818P55)
Sell To Open MTSI 18Aug17 60 Puts (MTSI170818P60) for a credit of $1.18 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when MTSI was trading near $63.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

If you use our favorite broker for this trade, tastyworks, your commission on this trade will only be $1 per opening contract ($2 per spread) (and there is no commission on closing trades, only the $.10 clearing fee).  Each contract would then yield $116 and your broker would charge a $500 maintenance fee, making your investment $384 ($500 – $116).  If MTSI closes at any price above $60 on August 18, 2017, both options would expire worthless, and your return on the spread would be 30% (395% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates July 21, 2017

IBD Underlying Updates July 21, 2017

IBD Underlying Updates July 21, 2017

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  The Terry’s Tips portfolio which places spreads like the above one has gained 113.5% so far in 2017 in spite of incurring some losses on some of the spreads placed.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Is Taiwan Semiconductor (TSM) Ready To Resume Higher?

Tuesday, July 18th, 2017

This week we are featuring a company that was just added to the Investor’s Business Daily (IBD) Top 50 List.  I hope that it is of interest to you.  The Terry’s Tips’  portfolio that places trades on our selections from the IBD Top 50 List has gained 117.7% so far in 2017.  Terry’s Tips subscribers who have trades placed in their accounts through Auto-Trade or who follow the portfolio on their own are happy campers right now.

Terry

Is Taiwan Semiconductor (TSM) Ready To Resume Higher?

Taiwan Semiconductor has been gaining popularity among investors as the company supplies key components used in the Iphone.  Apple’s smartphone saw sales exceeding 50 million units last quarter.  These analysts weigh in on why there may be further upside ahead for Taiwan Semiconductor’s stock price – 3 Things This Apple Inc. Supplier Wants You to Know and How To Become A Billionaire In One Step: Sell Components To Apple.

The technical indicators point to a healthy uptrend in TSM.  The stock price recently bounced higher from support at $34.42 and has regained the 20-day moving average.  The stock has held above the same moving average on a weekly chart for most of this year.  A rising trend channel has been in play since May last year and the lower line of the channel offers additional support near recent lows.

TSM Chart July 2017

TSM Chart July 2017

*source Tradingview.com

If you concur Taiwan Semiconductor is ready to resume higher, consider this trade which is a bet that the stock will continue to advance, or at least not decline very much over the next four weeks.

Buy To Open TSM 18Aug17 34 Puts (TSM170818P34)
Sell To Open TSM 18Aug17 35 Puts (TSM170818P35) for a credit of $0.21 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when TSM was trading near $36.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

If you use our favorite broker for this trade, tastyworks, your commission on this trade will only be $1 per opening contract ($2 per spread) (and there is no commission on closing trades, only the $.10 clearing fee).  Each contract would then yield $19 and your broker would charge a $100 maintenance fee, making your investment $81 ($100 – $19).  If TSM closes at any price above $35 on August 18, 2017, both options would expire worthless, and your return on the spread would be 23% (299% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates July 14, 2017

IBD Underlying Updates July 14, 2017

IBD Underlying Updates July 14, 2017

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  The Terry’s Tips portfolio which places spreads like the above one has gained 80% in the first six months of 2017 in spite of incurring some losses on some of the spreads placed.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Consider NutriSystem (NTRI) After The Price Correction

Monday, July 10th, 2017

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 companies.  In one of our portfolios, we use this list to find stocks that have displayed strong upward momentum and place option trades that take advantage of the trend.

Terry

Consider NutriSystem (NTRI) After The Price Correction

Several research firms have recently upgraded their rating on NutriSystem, the following article provides some details – NutriSytem Inc Receives Consensus Rating of “buy” from Brokerages.  As well, some big players upped their exposure to NutriSystem in the first quarter which is discussed in this article – Swiss National Bank Boosts Stake In NutriSystem Inc.

From a technical perspective, NTRI broke higher from a bullish flag pattern in late June to signal that a seven-week correction from a high posted in April may have completed.

The stock has been trending higher since 2013 and an acceleration of upside momentum is seen from early 2016.  NutriSystem broke above the 100-day moving average in the second quarter of 2016 and aside from a very brief dip below the indicator in January and June this year, the stock has held above it.

NTRI Graph July 2017

NTRI Graph July 2017

*source Tradingview.com

If you agree there’s further upside ahead for NutriSystem, consider this trade which is a bet that the stock will continue to advance, or at least not decline very much over the next six weeks.

Buy To Open NTRI 18Aug17 45 Puts (NTRI170818P40)
Sell To Open NTRI 18Aug17 50 Puts (NTRI170818P45) for a credit of $1.48 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when NTRI was trading near $52.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

If you use our favorite broker for this trade, tastyworks, your commission on this trade will only be $1 per opening contract ($2 per spread) (and there is no commission on closing trades, only the $.10 clearing fee).  Each contract would then yield $146 and your broker would charge a $500 maintenance fee, making your investment $354 ($500 – $146).  If NTRI closes at any price above $50 on August 18, 2017, both options would expire worthless, and your return on the spread would be 41% (355% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates July 7, 2017

IBD Underlying Updates July 7, 2017

IBD Underlying Updates July 7, 2017

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  The Terry’s Tips portfolio which places spreads like the above one has gained 80% in the first six months of 2017 in spite of incurring some losses on some of the spreads placed.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Align Technology (ALGN) A Buy After Being Added To The S&P 500

Monday, July 3rd, 2017

This week we are featuring a company listed on the Investor’s Business Daily (IBD) Top 50 List that has also recently been added to the S&P 500 index.  The stock has displayed strong upwards momentum and we look to place spreads that take advantage of this underlying strength.

Terry

Align Technology (ALGN) A Buy After Being Added To The S&P 500

Align Technology is the designer and manufacturer of the Invisalign System which they state is the most advanced clear aligner system in the world.  Analysts are optimistic of the company’s growth prospects and have recently revised up their expectations.  Zacks ranks this stock as a Strong Buy and these analysts have recently raised their targets: Align Technology (ALGN) PT Raised to $175 at Morgan Stanley; Huge At-Home Ortho Opportunity and Leerink Lifts Target On Align Technology, Sees 27% Upside.

From a technical perspective, ALGN boasts a strong uptrend and trades above key technical indicators.  On a daily chart, the stock jumped above the 20-day moving average following an earnings report in January and has held above it since.

A rising trend channel has been identified to contain price action since late April and a horizontal level at $145.24 offers additional support to create a confluence near the lower bound of the trend channel.

ALGN Chart July 2017

ALGN Chart July 2017

*source Tradingview.com

If you agree there’s further upside ahead for Align Technology, consider this trade which is a bet that the stock will continue to advance, or at least not decline very much over the next seven weeks.

Buy To Open ALGN 18Aug17 140 Puts (ALGN170818P140)
Sell To Open ALGN 18Aug17 145 Puts (ALGN170818P145) for a credit of $1.60 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when ALGN was trading near $150.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

If you use our favorite broker for this trade, tastyworks, your commission on this trade will only be $1 per opening contract ($2 per spread) (and there is no commission on closing trades, only the $.10 clearing fee).  Each contract would then yield $158 and your broker would charge a $500 maintenance fee, making your investment $342 ($500 – $158).  If ALGN closes at any price above $145 on August 18, 2017, both options would expire worthless, and your return on the spread would be 46% (342% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates July 1, 2017

IBD Underlying Updates July 3, 2017

IBD Underlying Updates June 30, 2017

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  The Terry’s Tips portfolio which places spreads like the above one has gained 80% in the first six months of 2017 in spite of incurring some losses on some of the spreads placed.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

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I have been trading the equity markets with many different strategies for over 40 years. Terry Allen's strategies have been the most consistent money makers for me. I used them during the 2008 melt-down, to earn over 50% annualized return, while all my neighbors were crying about their losses.

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