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Archive for August, 2017

Is Applied Materials (AMAT) Ready to Accelerate Higher?

Monday, August 28th, 2017

This week we are featuring a company listed on the Investor’s Business Daily (IBD) Top 50 List.  We use this list in one of our portfolios to target outperforming stocks and look to place options spreads that take advantage of the underlying trend..

You might be interested to know that Terry’s Tips carries out 10 actual options portfolios for paying subscribers to follow if they wish.  This week was a typical one for us.  The market (SPY) rose 0.8% while our composite portfolio average gained 2.8%.  So far for the year, our composite average has gained 54% (after commissions).

Terry

Is Applied Materials (AMAT) Ready to Accelerate Higher?

Several analysts have recently refreshed their bullish outlook towards Applied Materials and have raised price targets.  These articles provide more details Applied Materials Gets Several Price-Target Hikes on Earnings and Applied Materials Targets Surge On Upbeat Memory Chip, Display Markets.

From a technical perspective, AMAT has been consolidating within a range since around May with buyer’s holding the stock well above the $40.00 price point.  Buyer’s lifted the price higher about two weeks ago on an approach to the lower bound of the range.  While a horizontal level at $43.06 initially acted as resistance in the turn, the level held several declines in the past week.  AMAT shows a strong bullish trend on a weekly chart dating back to early 2016, and like several of the IBD Top 50 stocks, has been an outperformer within its sector.

AMAT Chart August 2017

AMAT Chart August 2017

*source Tradingview.com

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

Buy To Open AMAT 29Sep17 42.5 Puts (AMAT170929P425)
Sell To Open AMAT 29Sep17 43 Puts (AMAT1700929P430) for a credit of $0.17 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when AMAT was trading near $43.  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 $15 and your broker would charge a $50 maintenance fee, making your investment $35 ($50 – $15).  If AMAT closes at any price above $43 on September 29, 2017, both options would expire worthless, and your return on the spread would be 43% (446% annualized).

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

IBD Underlying Updates August 25, 2017

IBD Underlying Updates August 25, 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.  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 YY Inc (YY) A Bargain Above $70?

Sunday, August 20th, 2017

This week we are featuring another company listed on the Investor’s Business Daily (IBD) Top 50 List.  In one of our portfolio’s, we use this list to identify stocks that have displayed strong upside momentum and look to place options spreads to take advantage of the trend.

Terry

Is YY Inc (YY) A Bargain Above $70?

Several analysts have recently upgraded their outlook on YY stock.  These two banks have raised their price target to $100, suggesting a potential upside of 35%.  YY’s Buy Rating Reaffirmed at Deutsche bank AG and YY Inc. (YY) PT Raised to $100.00

YY stock recently corrected lower and horizontal support at $72.50 has held it higher on a weekly basis.  The level originates from a weekly chart and had held the stock lower on an attempt in 2015 and 2016.  A secondary level at $70.69 had acted as both support and resistance in late July.  It came into play last week to hold the stock higher on several attempts in the second half of the week.

YY Chart August 2017

YY Chart August 2017

*source Tradingview.com

If you agree there’s further upside ahead for YY Inc., consider this trade which is a bet that the stock will continue to advance, at least a little, over the next four weeks.

Buy To Open YY 15Sep17 70 Puts (YY170815P70)
Sell To Open YY 15Sep17 75 Puts (YY170815P75) for a credit of $2.18 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when YY was trading near $74.  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 $216 and your broker would charge a $500 maintenance fee, making your investment $284 ($500 – $216).  If YY closes at any price above $75 on August 15, 2017, both options would expire worthless, and your return on the spread would be 76% (989% annualized).

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

IBD Underlying Updates August 18, 2017

IBD Underlying Updates August 18, 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.  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

Cognex (CGNX) Is Set to Make New Records

Monday, August 14th, 2017

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

Terry

Cognex (CGNX) Is Set to Make New Records

Cognex reported earnings at the start of the month which led to a rally above a significant technical hurdle.  Cowen has since raised price targets to $135 and Zack’s equity research has written a compelling article outlining why they expect further upside in addition to rating the stock as a Strong Buy.

CGNX rallied to a record high after earnings, taking out a notable barrier from a horizontal level at $96.06 as well as the psychological $100.00 price point.  The horizontal level had previously held the stock lower on several attempts since early June.

The stock price has since corrected lower and over the past week the $100.00 level has held buyers to lift the price higher.  In the event the psychological level does not hold, support at $96.06 carries confluence with the 20-day moving average and a rising trendline that originates from a low posted in early July.

CGNX Chart August 2017

CGNX Chart August 2017

*source Tradingview.com

If you concur that Cognex has some further upside potential, consider this trade which is a bet that the stock will continue to advance, or at least not decline very much over the next five weeks.

Buy To Open CGNX 15SEP17 95 Puts (CGNX170915P140)
Sell To Open CGNX 15SEP17 100 Puts (CGNX170915P145) for a credit of $1.43 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when CGNX was trading near $101.  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 $141 and your broker would charge a $500 maintenance fee, making your investment $359 ($500 – $141).  If CGNX closes at any price above $100 on September 15, 2017, both options would expire worthless, and your return on the spread would be 39% (408% annualized).

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

IBD Underlying Updates August 11, 2017

IBD Underlying Updates August 11, 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.  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

Global Payments (GPN) Poised to Break $100 Mark

Tuesday, August 8th, 2017

This week we are discussing a new addition to the Investor’s Business Daily (IBD) Top 50 List.  We use this list in one of our portfolios to identify stocks that have displayed strong upward momentum and place spreads to profit from the underlying trend.  Actually, the stock price can even fall a little bit for the maximum gain to be realized.

Terry

Global Payments (GPN) Poised to Break $100 Mark

Several analysts have recently refreshed their bullish targets for GPN.  Here are two of them – Wells Fargo Upgrades Global Payments (GPN) to Outperform and Global Payments price target raised to $105 from $98 at Barclays.

GPN boasts a strong uptrend and has recently broken above major resistance at $93.31 after correcting lower for five weeks.  The stock has regained its 20-day moving average following a turn higher in the second week of July and broke to all-time highs on Friday.

GPN Chart August 2017

GPN Chart August 2017

*source Tradingview.com

If you agree there’s further upside ahead for Global Payments, 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 GPN 15SEP17 90 Puts (GPN170915P90)
Sell To Open GPN 15SEP17 95 Puts (GPN170915P95) for a credit of $1.00 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when GPN was trading near $98.  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 $98 and your broker would charge a $500 maintenance fee, making your investment $402 ($500 – $98).  If GPN closes at any price above $95 on September 15, 2017, both options would expire worthless, and your return on the spread would be 24% (211% annualized).

If you think there’s further upside ahead for Global Payments, consider this trade which is a bet that the stock will continue to advance.

Buy To Open GPN 15SEP17 95 Puts (GPN170915P95)
Sell To Open GPN 15SEP17 100 Puts (GPN170915P100) for a credit of $2.33 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when GPN was trading near $98 at the close yesterday.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

If you use tastyworks, your commission on this trade, each contract would then yield $231 and your broker would charge a $500 maintenance fee, making your investment $269 ($500 – $231).  If GPN closes at any price above $100 on September 15, 2017, both options would expire worthless, and your return on the spread would be 86% (744% annualized).

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

IBD Underlying Updates August 4, 2017

IBD Underlying Updates August 4, 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.  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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