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Archive for the ‘Credit Spreads’ Category

Is SVB Financial Group (SIVB) Ready To Continue Higher After The Price Correction?

Monday, October 23rd, 2017

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 portfolios to identify outperforming stocks and place spreads that take advantage of the underlying trend and momentum.

I did want you to know that the 10 actual option portfolios carried out at Terry’s Tips  for paying subscribers reached an important milestone this week.  These portfolios use a variety of pre-determined options strategies and differing underlying stocks or ETPs.  If you had invested in all 10 portfolios in January 2017, you would have invested $48,600.  This week, the composite value of those portfolios reached $97,742, a gain of 101%.  For the first time, we are up 100% for the year.  A milestone to celebrate!  Isn’t it time that you learned how we did it so that you could enjoy these kinds of returns in your own investment account?

Terry

Is SVB Financial Group (SIVB) Ready To Continue Higher After The Price Correction?

SIVB recently broke higher from a correction that had taken place since March.  The stock price started trending higher in late September and made a series of technical breaks by regaining its 200-period daily moving average and breaking above a declining trend channel that had encompassed the roughly six-month correction.

SIVB corrected lower last week following the technical break but turned higher after retesting the broken trend channel, slightly ahead of the 200-period daily moving average.  The stock price ended the week near 189.50 after a gap higher inspired by the earnings report, taking out resistance at 186.09 which was a hurdle in May and August.  The trend channel which is found on a daily chart resembles a flag pattern and the recent upside break signals a bullish continuation.

SIVB Chart October 2017

SIVB Chart October 2017

*source Tradingview.com
If you agree there’s further upside ahead for SVB Financial Group, consider this trade which is a bet that the stock will continue to advance at least a little bit over the next four weeks.

Buy To Open SIVB 17Nov17 185 Puts (SIVB171117P185)
Sell To Open SIVB 17Nov17 190 Puts (SIVB171117P190) for a credit of $2.08 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when SIVB was trading near $189.50.  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 $206 and your broker would charge a $500 maintenance fee, making your investment $294 ($500 – $206).  If SIVB closes at any price above $190 on November 17, 2017, both options would expire worthless, and your return on the spread would be 70% (1023% annualized).

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

IBD Underlying Updates October 19, 2017

IBD Underlying Updates October 19, 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

Will the Nvidia (NVDA) Bull Run Continue?

Monday, October 9th, 2017

This week we are discussing another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our portfolios to identify stocks with upward momentum and place spreads which will profit if the upward momentum continues for about four weeks.  Actually, the stock can even fall a little for the maxium gain to be made on these spreads.

The actual portfolios carried out for Terry’s Tips’s paying subscribers had another banner week, gaining an average of 4.7% while the market (SPY) rose 1.2%.  Our 10 portfolios have now gained 86.7% so far in 2017.  Options clearly can deliver extraordinary gains if they are set up properly.

Terry

Will the Nvidia (NVDA) Bull Run Continue?

Nvidia stock has gained significantly over the last year and several analysts believe there is further upside.  Here are two of them – Buy Nvidia, market’s hottest stock, on its gaming, A.I. prowess: Citi and 14% Upside Seen For Nvidia Shares On PC Gaming, Bitcoin Mining Strength.

From a technical perspective, NVDA has been rallying in a rising trend channel since early July.  There was a correction that took place late last month, however, the 20-day moving average as well as the lower bound of the rising channel held the stock price higher and continues to offer downside support.

 

NVDA Chart October 2017

NVDA Chart October 2017

*source Tradingview.com

If you agree there’s further upside ahead for Nvidia, 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 NVDA 3Nov17 177.50 Puts (NVDA171103P17750)
Sell To Open NVDA 3Nov17 180.00 Puts (NVDA171103P18000) for a credit of $1.10 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when NVDA was trading near $181.  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 $108 and your broker would charge a $250 maintenance fee, making your investment $142 ($250 – $108).  If NVDA closes at any price above $180 on November 3, 2017, 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 October 5, 2017

IBD Underlying Updates October 5, 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

Earnings Growth To Fuel Further Momentum For Red Hat (RHT)

Monday, October 2nd, 2017

This week we are featuring a recent addition to the Investor’s Business Daily (IBD) Top 50 List of companies.  We use this list in one of our portfolios to spot outperforming stocks 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.

The 10 Terry’s Tips option portfolios enjoyed another stellar week last week, gaining an average of 1.2%, and making the ytd number a whopping 78% for all the portfolios combined.  This is over 7 times as great as the 2017 results for the market (SPY) which is up about 11%.

Terry

Earnings Growth To Fuel Further Momentum For Red Hat (RHT)

Red Hat reported above-consensus earnings in the past week and several analysts have refreshed their upside targets since.  Here are two of them – Red Hat PT raised to $128 at BMO Capital and Red Hat PT Raised to $117 at JPMorgan Following 2Q.

Red Hat’s earnings report triggered a push higher above a notable horizontal level at $108.04 that held the stock price lower on several attempts throughout the month prior to the report.  RHT also regained the 20-period daily moving average on the back of the same surge and hit fresh 52-week highs.  The horizontal level and the moving average fall in close proximity to each other, offering a strong confluence of downside support.

 

RHT Chart October 2017

RHT Chart October 2017

*source Tradingview.com

If you agree there’s further upside ahead for Red Hat, 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 RHT 17Nov17 105 Puts (RHT171117P105)
Sell To Open RHT 17Nov17 110 Puts (RHT171117P110) for a credit of $1.45 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when RHT was trading near $111.  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 $143 and your broker would charge a $500 maintenance fee, making your investment $357 ($500 – $143).  If RHT closes at any price above $110 on November 17, 2017, both options would expire worthless, and your return on the spread would be 40% (325% annualized).

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

IBD Underlying Updates September 28, 2017

IBD Underlying Updates September 28, 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

Advanced Energy Industries (AEIS) Offers An Attractive Entry Point

Monday, September 25th, 2017

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 portfolios to find outperforming stocks and place spreads that profit if the upward momentum continues for about four more weeks.  Actually, the stock can even decline a little for the maximum gain to be realized on these spreads.

2017 has been a good year for the market.  The S&P 500 is up almost 11%.  The 10 options portfolios carried out by Terry’s Tips have gained a composite average of 75.6% so far this year (after paying all the commissions).  Our strategies have gained almost 7 times as much as the market has picked up.  Isn’t it about time that you learned more about the wonderful world of options?

Terry

Advanced Energy Industries (AEIS) Offers An Attractive Entry Point

Several analysts are expecting AEIS to continue higher.  Needham analyst Edward Monk recently reiterated a Buy rating and set a price target of $80.  Another analyst has made a strong fundamental case for further upside in the stock price in his article posted at Seeking Alpha, highlighting impressive growth, no long-term debt, and a strong balance sheet.

The technical outlook for AEIS suggests the stock is ready to resume higher.  The stock recently climbed back above a significant horizontal level at $72.88 which was major resistance in 2000 on a monthly chart.  A rising trendline that originates from a low posted in early July has held declines and a declining trendline that connects the top from July with a high posted in early September has been breached to the upside.  The same declining trendline held the correction last week and there was a great deal of momentum behind the recovery from it.

AEIS Chart September 2017

AEIS Chart September 2017

*source Tradingview.com

If you agree there’s further upside ahead for Advanced Energy, 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 AEIS 20Oct17 70 Puts (AEIS171020P70)
Sell To Open AEIS 20Oct17 75 Puts (AEIS171020P75) for a credit of $1.25 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when AEIS was trading near $76.  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 $123 and your broker would charge a $500 maintenance fee, making your investment $377 ($500 – $123).  If AEIS closes at any price above $75 on October 20, 2017, both options would expire worthless, and your return on the spread would be 32% (474% annualized).

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

IBD Underlying Updates September 22, 2017

IBD Underlying Updates September 22, 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

Will Alibaba (BABA) Continue The Upward Momentum?

Monday, September 18th, 2017

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 portfolios to identify stocks that have displayed strong upward momentum and place spreads that profit it the momentum continues for about six weeks.

Last week, the 10 Terry’s Tips portfolios enjoyed another banner week. While SPY rose 1.1%, all 10 portfolios gained an average of 6.9% and are now up 75% for the year to date.  Isn’t it time you took a look at how we are doing this?  You just might learn something new.

Terry

Will Alibaba (BABA) Continue The Upward Momentum?

Some well-known analysts are quite bullish Alibaba stock and outline why they expect further upside here – Why Druckenmiller Is Optimistic about Chinese Consumer Stocks and Why Goldman Sachs is Optimistic about Alibaba.

BABA has been trending higher since late 2015 with a boost in upside momentum since the start of the year.  The stock gapped higher following the last earnings report and recently broke to record highs without closing the gap.  The 20-day moving average has held the stock higher since the middle of August and offers strong downside support as it resides within proximity of last month’s close of 172.47

BABA Chart September 2017

BABA Chart September 2017

*source Tradingview.com

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

Buy To Open BABA 27Oct17 175 Puts (BABA171027P175)
Sell To Open BABA 27Oct17 177.5 Puts (BABA171027P177.5) for a credit of $0.75 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when BABA was trading near $177.  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 $73 and your broker would charge a $250 maintenance fee, making your investment $177 ($250 – $73).  If BABA closes at any price above $177.50 on October 27, 2017, both options would expire worthless, and your return on the spread would be 41% (357% annualized).

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

IBD Underlying Updates September 15, 2017

IBD Underlying Updates September 15, 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

Electronic Arts (EA) Stock Appears Undervalued After Analyst Upgrades

Tuesday, September 12th, 2017

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 portfolios to spot outperforming stocks and place spreads that take advantage of the momentum.

Also, don’t forget that we are now offering our

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For this lowest-price-ever $39.95 offer, click here, enter Special Code BTS17 (or BTS17P for Premium Service – $79.95).

This is a time-limited offer.  You must order by Monday, September 18, 2017.  That’s when the half-price offer expires, and you will have to go back to the same old investment strategy that you have had limited success with for so long (if you are like most investors).

Terry

Electronic Arts (EA) Stock Appears Undervalued After Analyst Upgrades

Analysts at Goldman Sachs are optimistic of the gaming industry and have initiated Electronic Arts with a Buy and a $136 price target.  Several other analysts have rated the stock as a Buy including the Jefferies Group who have recently restated their rating with a $135 price target.

 

From a technical perspective, EA has recently scaled above a notable hurdle at $116 which had capped gains in June.  Dips towards the level have been met with buyers since the middle of September, establishing the horizontal level as strong support.  A rising trend channel has encompassed price action since late July and the lower bound of the channel offers additional support slightly ahead of the horizontal level.

*source Tradingview.com

If you agree there’s further upside ahead for Electronic Arts, 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 EA 20Oct17 110 Puts (EA171020P110)
Sell To Open EA 20Oct17 115 Puts (EA171020P115) for a credit of $1.35 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when EA was trading near $118.  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 $133 and your broker would charge a $500 maintenance fee, making your investment $367 ($500 – $133).  If EA closes at any price above $115 on October 20, 2017, both options would expire worthless, and your return on the spread would be 36% (314% 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.  It is interesting to see that MA was removed from the list this week.  This seems unusual since the stock moved up almost $4 last week.  This is the stock that is traded in the Terry’s Tips  portfolio called Rising Tide.  This portfolio has gained 120% so far in 2017 while MA has gained 31%.  We have almost done 4 times as great as the stock price increase.

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

Happy trading,

Terry

Facebook (FB) Is Set To Resume Higher After The Price Correction

Monday, September 4th, 2017

This week we are discussing a well-known company that is listed on the Investor’s Business Daily (IBD) Top 50 List.  In one of our portfolio’s, we screen this list to identify trending stocks to place spreads that profit if the stock continues higher.  Actually, the stock can even decline a little to realize the maximum gain.

Terry’s Tips carries out 10 different portfolios for paying subscribers.  Each portfolio is set up in an actual broker account and all results include full commissions.  Last week was an unusually good one for these portfolios – every one of them made gains, and the average composite gain was a whopping 8.9%.  So far in 2017, these portfolios have picked up an average of 67.8%.  How sweet it is.

Terry

Facebook (FB) Is Set To Resume Higher After The Price Correction

Several analysts believe there is further upside ahead for Facebook, here are two of them – Why Facebook Inc (FB) Stock Can Still Run Much Higher and Flagging Facebook Inc (FB) Stock for a Bullish Breakout.

The second article identifies a bull flag pattern which offers a technical signal for a bullish continuation.  Alternatively, the price action that takes place from around the end of July to late September can be viewed as a pennant.  Both patterns signal the same thing which is a continuation of the bullish trend.

Continuation patterns tend to be respected by technical traders, especially when it follows a strong uptrend which has been the case with Facebook.

FB Chart September 2017

FB Chart September 2017

*source Tradingview.com

If you agree there’s further upside ahead for Facebook, 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 FB 20Oct17 165 Puts (FB171020P165)
Sell To Open FB 20Oct17 170 Puts (FB171020P170) for a credit of $1.59 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when FB was trading near $172.  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 $157 and your broker would charge a $500 maintenance fee, making your investment $343 ($500 – $157).  If FB closes at any price above $170 on October 20, 2017, both options would expire worthless, and your return on the spread would be 46% (340% annualized).

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

IBD Underlying Updates September 1, 2017

IBD Underlying Updates September 1, 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 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

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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