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Archive for the ‘Credit Spreads’ Category

Ulta Beauty (ULTA) Nears Record Highs, Will it Break Upward?

Monday, July 15th, 2019

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.

Terry

Ulta Beauty (ULTA) Nears Record Highs, Will it Break Upward?

After an impressive run in the first half of the year, several analysts still see the potential for further upside in ULTA. Take a look at what these analysts have to say – Ulta Beauty – Consensus Indicates Potential 4.2% Upside and Why Ulta Beauty Stock Gained 42% So Far in 2019.

ULTA is actually seen approaching a significant resistance level at $359. There are a few indicators that suggest that the stock will break higher from here. First, the stock posted a bullish engulfing candle in the past week. This momentum seems to suggest that ULTA is ready to continue rallying. Second, the stock held above an important support level in May that is found at $315. That level held the stock lower in 2017 and 2018. The strong presence of buyers and the steady bid from the level shows that the stock is well in demand. Lastly, when a stock lingers around a resistance level without a strong show of selling, it usually suggests an upward break. Especially when there is a strong trend in place as is the case for ULTA.

ULTA Chart July 2019 verticle spread

ULTA Chart July 2019

If you agree there’s further upside ahead for ULTA, 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 ULTA 16AUG19 350 Puts (ULTA190816P350)
Sell To Open ULTA 16AUG19 355 Puts (ULTA190816P355) for a credit of $2.03 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when ULTA was trading near $356.  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 $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $200.50 and your broker would charge a $500 maintenance fee, making your investment $299.50 ($500 – $200.50).  If ULTA closes at any price above $355 on August 16, both options would expire worthless, and your return on the spread would be 67% (764% annualized).

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

IBD Underlying Updates July 11, 2019 Weekly Trade Ideas

IBD Underlying Updates July 11, 2019

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

Will Monster Beverage (MNST) Continue to Rally Into Earnings?

Monday, July 8th, 2019

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.

Terry

Will Monster Beverage (MNST) Continue to Rally Into Earnings?

Zack’s recently published an article outlining reasons why they believe Monster Beverage is a good investment. Take a look at the article here – Here’s Why Monster Beverage is a Hot Investment Pick. Also, take a look at the following article which discusses the involvement of hedge funds in the stock – Did Hedge Funds Drop the Ball on Monster Beverage?

MNST is testing some resistance found at $66.25 but the recent price action appears to show strength. Indeed, the horizontal level has been holding sellers, but each decline from the level has become increasingly narrow which often is indicative of breakout potential. So far, the stock has tested the level three times. Triple tops are rare, especially in strong uptrends like the one MSNT has been experiencing as of late.

MNST Chart July 2019 Terry's Tips Weekly Trade Idea

MNST Chart July 2019

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

Buy To Open MNST 09AUG19 63 Puts (MNST190809P63)
Sell To Open MNST 09AUG19 66 Puts (MNST190809P66) for a credit of $1.12 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when MNST was trading near $66.  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 $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $109.50 and your broker would charge a $300 maintenance fee, making your investment $190.50 ($300 – $109.50).  If MNST closes at any price above $66 on August 09, both options would expire worthless, and your return on the spread would be 57% (650% annualized).

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

IBD Underlying Updates July 4, 2019 Terry's Tips Weekly Trade Idea

IBD Underlying Updates July 4, 2019

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

Consider Adobe (ADBE) Following Its Q2 Earnings Beat

Monday, July 1st, 2019

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.

Terry

Consider Adobe (ADBE) Following Its Q2 Earnings Beat

Adobe soared to record highs after its recent earnings beat and several analysts expect that the momentum will continue. Here are two of them – 3 Stocks to Buy and Hold for Decades and Adobe Is a Buy Despite High Valuation.

Adobe has broken above two important horizontal levels in June. The first price point at $270 is derived from a monthly chart and marks resistance that held the stock lower in 2018. So far, the stock has managed to hold above it, on a monthly basis, for three months now. The second level falls at $286 and marks a horizontal level that has acted as both support and resistance. With the 20-day moving average converging towards the level, this is an area that is likely to hold some buyers.

ADBE Chart July 2019 Vertical Spread

ADBE Chart July 2019

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, at least a little bit.

Buy To Open ADBE 2AUG19 292.5 Puts (ADBE19082P292.5)
Sell To Open ADBE 2AUG19 295 Puts (ADBE19082P295) for a credit of $1.10 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when ADBE was trading near $295.  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 $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $107.50 and your broker would charge a $250 maintenance fee, making your investment $142.50 ($250 – $107.50).  If ADBE closes at any price above $295 on August 2, both options would expire worthless, and your return on the spread would be 75% (855% annualized).

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

IBD Underlying Updates June 27, 2019 Terry's Tips Weekly Newsletter

IBD Underlying Updates June 27, 2019

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

Can Lululemon Athletica (LULU) Continue the Earnings Driven Momentum?

Monday, June 24th, 2019

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.

Terry

Can Lululemon Athletica (LULU) Continue the Earnings Driven Momentum?

LULU broke to record highs after their recent earnings announcement. Several analysts think the stock will continue to climb, here are two of them – UBS Group Raises Lululemon Athletica Price Target to $186 and Best Stocks for 2019: Lululemon Stock Looks Ready for More Growth.

From a technical perspective, LULU looks well supported. The first level is seen near $178 which marks a prior resistance level that held it lower in April and early May. Further support comes from the 50-day moving average, found just below the horizontal level. LULU has been trading within a rising trend channel since late December. The lower bound of this channel offers further support, although at this time it doesn’t seem likely that the stock will try and retest it.

LULU Chart June 2019 Vertical Spread

LULU Chart June 2019

If you agree there’s further upside ahead for LULU, 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 LULU 26JUL19 177.5 Puts (LULU190726P177.5)
Sell To Open LULU 26JUL19 180 Puts (LULU190726P180) for a credit of $0.98 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when LULU was trading near $182.  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 $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $95.50 and your broker would charge a $250 maintenance fee, making your investment $154.50 ($250 – $95.50).  If LULU closes at any price above $180 on July 26, both options would expire worthless, and your return on the spread would be 62% (707% annualized).

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

IBD Underlying Updates June 22, 2019 Terry's Tips

IBD Underlying Updates June 22, 2019

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

The Trade Desk (TTD) Has Doubled in Value YTD

Monday, June 17th, 2019

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.

Terry

The Trade Desk (TTD) Has Doubled in Value YTD

TTD has had an impressing rally in the year thus far, and these two analysts think it can continue the upward moment – Better Than an Ultra-Growth Stock? – The Trade Desk and The Trade Desk Could be the Investment of a Lifetime

The stock price just broke to record highs in the past week after breaking above a prior top set in early May. So far, the breakout point at $232.70 has held the upside. In the event the stock falls through, further support is at the 20-day moving average. What makes this stock so attractive is the upward momentum as well as it outperformance to the rest of the market. Looking at the gain for June alone, the stock is up just over 22% versus about a 5% gain for SPY.

TTD Chart June 2019 Vertical Spread

TTD Chart June 2019

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

Buy To Open TTD 02AUG19 240 Puts (TTD190802P240)
Sell To Open TTD 02AUG19 245 Puts (TTD190802P245) for a credit of $2.28 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when TTD was trading near $245.  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 $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $225.50 and your broker would charge a $500 maintenance fee, making your investment $274.50 ($500 – $225.50).  If TTD closes at any price above $245 on August 02, both options would expire worthless, and your return on the spread would be 82% (935% annualized).

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

IBD Underlying Updates June 15, 2019 Terry's Tips

IBD Underlying Updates June 15, 2019

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 the Tide Turned for Five Below Inc (FIVE)?

Sunday, June 9th, 2019

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.

Terry

Has the Tide Turned for Five Below Inc (FIVE)?

Several analysts are looking for more upside in FIVE, here are two of them – Hedge Funds Have Never Been This Bullish On Five Below Inc and I’m Sorry, But the Five Below Stock Selloff Is Overdone.

FIVE fell under a little bit of pressure after reporting earnings in the past week. However, the stock recovered on Friday, resulting in a bullish engulfing candle. This pattern often signals a reversal but what makes it even more significant is that the pattern occurred following a test of important support. Specifically, from the 200-day moving average and the lower bound of a trend channel. A second reversal candlestick is seen on a weekly chart that makes an even strong case that FIVE might turn higher from here.

If you agree there’s further upside ahead for FIVE, 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 FIVE 12JUL19 124 Puts (FIVE190712P124)
Sell To Open FIVE 12JUL19 127 Puts (FIVE190712P127) for a credit of $1.33 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when FIVE was trading near $127.50.  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 $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $130.50 and your broker would charge a $300 maintenance fee, making your investment $169.50 ($300 – $130.50).  If FIVE closes at any price above $127 on July 12, both options would expire worthless, and your return on the spread would be 77% (878% annualized).

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

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

Amazon (AMZN) Is Testing a Major Technical Support Area, Is It Time to Buy?

Tuesday, June 4th, 2019

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.

Terry

Amazon (AMZN) Is Testing a Major Technical Support Area, Is It Time to Buy?

Some analysts did a double take this past week when a Piper Jaffray analyst said AMZN could reach $3000. Granted, his views are over a few years, but the article stands to spark some buying interest.  Take a look at the following article for full details – Can Amazon Really Reach $3000? You Bet.  Also take a look at this article which discusses an upside target from another analyst, and contains a video of Yahoo staff discussing the Piper Jaffray call – Amazon Stock Poised for Continued Growth; Here’s Why.

As indicated by the headline, Amazon is seen testing a significant support area.  Specifically, there are three items that are lined up to create a confluence – The 100-day moving average, 200-day moving average, and a horizontal level.  It’s quite rare to have all three lined up pretty much perfectly at the same price point and probabilities favor that buyers will be there to defend it.

If you agree there’s further upside ahead for AMZN, 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 AMZN 5JUL19 1770 Puts (AMZN190705P1770)
Sell To Open AMZN 5JUL19 1775 Puts (AMZN190705P1775) for a credit of $2.25 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when AMZN was trading near $1775.  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 $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $222.50 and your broker would charge a $500 maintenance fee, making your investment $277.50 ($500 – $222.50).  If AMZN closes at any price above $1775 on July 5, both options would expire worthless, and your return on the spread would be 80% (913% annualized).

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

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

Innovative Industrial Properties (IIPR) Has Nearly Doubled YTD, Will It Continue to Surge?

Sunday, May 19th, 2019

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.

Terry

Innovative Industrial Properties (IIPR) Has Nearly Doubled YTD, Will It Continue to Surge?

IIPR has had an extremely impressive rally in the year thus far, the following two articles suggest it could continue the momentum – Hedge Funds Have Never Been More Bullish On Innovative Industrial Properties and If You Had Bought Innovative Industrial Properties Stock A Year Ago, You Could Pocket A 148% Gain Today.

The stock had been trading sideways for the last six weeks or so but in the past week, a bullish break out seems to have materialized as IIPR is seen climbing above $87.50.  The horizontal level represents resistance that held the stock lower in late April and early May.  Often when a stock has a strong rally, a consolidation period takes place prior to a bullish continuation.  This particular stock makes a strong case for exactly such a scenario.

If you agree there’s further upside ahead for IIPR, 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 IIPR 21JUN19 80 Puts (IIPR190621P80)
Sell To Open IIPR 21JUN19 85 Puts (IIPR190621P85) for a credit of $1.33 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when IIPR was trading near $89.  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 $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $130.50 and your broker would charge a $500 maintenance fee, making your investment $369.50 ($500 – $130.50).  If IIPR closes at any price above $85 on June 21, both options would expire worthless, and your return on the spread would be 35% (399% annualized).

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

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

Wyndham Hotels & Resorts (WH) Technicals Point to More Upside

Sunday, May 12th, 2019

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.

Terry

Wyndham Hotels & Resorts (WH) Technicals Point to More Upside

The following two articles suggest there could be more upside in WH.  The first highlights a technical development while the second hints of bullish potential by way of how hedge funds are positioned.  Take a look here – Moving Average Crossover Alert: Wyndham Hotels & Resorts and Here’s What Hedge Funds Think About Wyndham Hotels & Resorts.

In addition to the moving average crossover highlighted in the article above, the technicals for WH seem to suggest a new bullish leg could start from current levels after the brief consolidation that started in late April.  The rationale being that the stock bounced sharply higher from a confluence of support on Friday that consists of a horizontal level that previously held the stock lower in February and April as well as the 20-day moving average.  Also, the recovery from this confluence area combined with a higher close has resulted in a hammer candlestick pattern on a daily chart, a pattern that often signals a reversal from the prior correction.

If you agree there’s further upside ahead for WH, 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 WH 21JUN19 52.5 Puts (WH190621P52.5)
Sell To Open WH 21JUN19 55 Puts (WH190621P55) for a credit of $0.78 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when WH was trading near $56.  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 $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $75.50 and your broker would charge a $250 maintenance fee, making your investment $174.50 ($250 – $75.50).  If WH closes at any price above $55 on June 21, both options would expire worthless, and your return on the spread would be 43% (402% annualized).

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

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 Twitter (TWTR) Breakout?

Monday, May 6th, 2019

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.

Terry

Should You Buy the Twitter (TWTR) Breakout?

TWTR posted an impressive gain in April and several analysts expect it will continue to outperform.  Take a look at the following two articles to see what they have to say about the stock – Why Twitter Stock Gained 21% in April and Twitter’s “Outperform” Rating Reiterated at CIBC.

A rally on the back of Twitter’s latest earnings report has resulted in a significant technical breakout as the stock managed to cross a highly respected resistance level found at $35.  Essentially, the stock had consolidated in a range between roughly $27 and $35 in the prior 9 months.  This technical break confirms a bullish trend, at least in the near-term.  Upside resistance levels are seen near $42.50  which acted as support ahead of the July 2018 earnings report, followed by $46.75 which falls near last year’s highs.

If you agree there’s further upside ahead for TWTR, 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 TWTR 14JUN19 37.5 Puts (TWTR190614P37.5)
Sell To Open TWTR 14JUN19 40.5 Puts (TWTR190614P40.5) for a credit of $1.00 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when TWTR was trading near $41.  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 $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $97.50 and your broker would charge a $300 maintenance fee, making your investment $202.50 ($300 – $97.50).  If TWTR closes at any price above $40.50 on June 14, both options would expire worthless, and your return on the spread would be 48% (449% annualized).

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

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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