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Archive for April, 2020

Barrick Gold (GOLD) Poised to Advance After Breaking to a Seven-Year High

Monday, April 27th, 2020

I invite you to check out our Track Record during this difficult economic time.  In the first quarter of this year the market fell by 23%.  The actual options portfolios carried out at Terry’s Tips increased by 46% during this quarter.  Quite a difference, something that we are quite proud of.   This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Several analysts believe Barrick Gold is a good investment, here are two of them – Barrick Gold (GOLD) Moves to Strong Buy: Rationale Behind the Upgrade and What Makes Barrick (GOLD) an Attractive Investment Option.

Technicals

Barrick Gold recently broke to a seven-year high after crossing above the 2016 high near $23. Similar breakouts are seen in related instruments such as the gold miners ETF (GDX). Further, GOLD is up more than 100% since the bottom in late March. The bottom correlates well with the S&P 500 yet the index has gained roughly 30% since then, in comparison. Precious metals and related stocks typically gain when equities are under pressure and the out performance during a bullish rally in stocks speaks to the strength and demand for precious metals at this time. Lastly, GOLD was added to the IBD Top 50 list this past week along with Kirkland Gold (KL), and Franco Nevada (FNV) was added last week. The sudden addition of these three stocks adds to the bullish case for this sector.

GOLD Chart April 2020

GOLD Chart April 2020

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

Buy To Open GOLD 05JUN20 24 Puts (GOLD200605P24)
Sell To Open GOLD 05JUN20 27 Puts (GOLD200605P27) for a credit of $1.70 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when GOLD was trading near $27.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $168.70 and your broker would charge a $300 maintenance fee, making your investment $131.30 ($300 – $168.70).  If GOLD closes at any price above $27 on June 05, both options would expire worthless, and your return on the spread would be 128% (1198% annualized).

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

IBD Underlying Updates April 25, 2020

IBD Underlying Updates April 25, 2020

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

Cloud-Based Software Company Veeva Systems (VEEV) Breaks to a Record High

Monday, April 20th, 2020

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Veeva Systems is among a small group of stocks that broke to an all-time high in the past week. The Investor’s Business Daily recently wrote an article explaining why the stock stands out – IBD 50 Growth Stocks To Watch: Veeva’s Virtual Role In The Coronavirus Fight. Also have a look at the following article which discusses the company’s strong financials and prospects for growth – Is Now The Time To Put Veeva Systems (NYSE:VEEV) On Your Watchlist?

Technicals

VEEV Chart April 2020

VEEV Chart April 2020

The main appeal to VEEV is that it is a clear outperformer. The stock broke above $177 in the past week which signals that the uptrend has resumed after a correction that started in July last year and lasted until about a month ago. The stock is a bit oversold over the near-term and this could result in a consolidation. However, the bullish break stands to keep the stock well bid on dips with the first level of support at last year’s high of $177.

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

Buy To Open VEEV 15MAY20 175 Puts (VEEV200515P175)
Sell To Open VEEV 15MAY20 180 Puts (VEEV200515P180) for a credit of $2.18 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when VEEV was trading near $181.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $216.70 and your broker would charge a $500 maintenance fee, making your investment $283.30 ($500 – $216.70).  If VEEV closes at any price above $180 on May 15, both options would expire worthless, and your return on the spread would be 76% (1110% annualized).

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

IBD Underlying Updates April 18, 2020

IBD Underlying Updates April 18, 2020

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

Has Adobe (ADBE) Reverted to a Bullish Trend?

Monday, April 13th, 2020

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

With the markets gaining upward momentum, several analysts have had good things to say about Adobe. Here is what the IBD thinks about the stock – Is Adobe Stock A Buy Right Now? Here’s What Earnings, ADBE Chart Show. Also take a look at the following article which makes a case that the company is in a good position to handle the impact of the Coronavirus – Adobe: A Resilient Software Giant

Technicals

The main technical development for ADBE as of late is that it has comfortably regained its 200-day moving average. This particular indicator has drawn buyers in the past and dips below it have generally been short-lived in the recent past. The stock appears to be building a base for its next move higher. Further, the monthly candle for March signals that there was strong buying after the dip below $300. Over the near-term, the $327 price point has proven to be a small hurdle. A break above can lead to a rally towards $360 which is a significant technical area for the stock.

ADBE Chart April 2020 bullish trend

ADBE Chart April 2020

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

Buy To Open ADBE 15MAY20 315 Puts (ADBE200515P315)
Sell To Open ADBE 15MAY20 320 Puts (ADBE200515P320) for a credit of $1.60 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when ADBE was trading near $319.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $158.70 and your broker would charge a $500 maintenance fee, making your investment $341.30 ($500 – $158.70).  If ADBE closes at any price above $320 on May 15, both options would expire worthless, and your return on the spread would be 46% (525% annualized).

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

IBD Underlying Updates April 11, 2020

IBD Underlying Updates April 11, 2020

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

Should you Buy the Dip in Zoom Video Communications (ZM)?

Monday, April 6th, 2020

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Zoom’s stock price corrected lower in the past week on privacy and other concerns. The question at this point is whether investors will see value after a more than 20% drop from the high. The following article discusses the concerns investors are faced with and how the company CEO is addressing them –  Zoom says it topped 200 million daily participants in March as CEO addresses privacy concerns. Also take a look at this article which highlights why ZM is an attractive stock, particularly at this time – 4 Tech Stocks Boosted by Remote Schooling Sessions.

Technicals

A confluence of support held ZM higher in the past week. It consists of a horizontal level at $120, which was prior resistance in late February and early March, and a rising trendline that dates back to late January. While above this area, the stock has the potential to extend higher, at least towards the next level of interest which falls at $135.

ZM Chart April 2020 dip from COVID-19 overload

ZM Chart April 2020

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

Buy To Open ZM 08MAY20 120 Puts (ZM200508P120)
Sell To Open ZM 08MAY20 125 Puts (ZM200508P125) for a credit of $2.68 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when ZM was trading near $128.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $266.70 and your broker would charge a $500 maintenance fee, making your investment $233.30 ($500 – $266.70).  If ZM closes at any price above $125 on May 08, both options would expire worthless, and your return on the spread would be 114% (1300% annualized).

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

IBD Underlying Updates April 4, 2020

IBD Underlying Updates April 4, 2020

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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Success Stories

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.

~ John Collins