Archive for the ‘Earnings Announcement Options Strategy’ Category
Sunday, February 10th, 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. Our actual portfolio carried out at Terry’s Tips which trades these weekly ideas has gained 114% in the first five weeks of 2019. This portfolio also made over 100% in 2018 and we withdrew the starting investment amount so that we are playing entirely with profits at this time. Of course, there is no certainty that we can duplicate this success in the future, but we feel pretty good about our prospects.
Terry
Can Microchip Technology (MCHP) Maintain its Post-Earnings Momentum?
Microchip Technology saw its stock price rally just over 10% prior to pulling back as investor optimism grew following their earnings report in the past week. Just to be clear, the report was not as upbeat as expected. Actually, the stock had turned down initially, but it was a prediction from the company Chief Executive that caused investors to change their view and start buying. It’s a rather interesting turn of events and the following two articles explain why the markets have put so much weight to his prediction, and why the stock may continue to rise from here – Microchip’s stock soars after CEO calls for a bottom, and he’s been right before and Microchip: A Bottom Is Possibly In.
The push higher following earnings led to a signifcant technical break as the stock was pressed against a confluence of resistance prior to it. Resistance comes from the 200-day moving average as well as a declining trendline drawn from the June top. The stock price has pulled back a bit from horizontal resistance found at $89.20 that was a prior low and prior resistance following a gap down last summer. Support is found just above $85. In the even the support level does not hold, stronger support is found at the prior breakout point. Considering the significance of the technical break, bulls are likely to defend any dips in the near-term.
MCHP Chart February 2019
*source Tradingview.com
If you agree there’s further upside ahead for MCHP, 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 MCHP 15MAR19 85.00 Puts (MCHP190315P85.00)
Sell To Open MCHP 15MAR19 87.50 Puts (MCHP190315P87.50) for a credit of $1.10 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when MCHP was trading near $87.50. 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 $355.50 and your broker would charge a $1000 maintenance fee, making your investment $644.50 ($1000 – $355.50). If MCHP closes at any price above $87.50 on March 15, both options would expire worthless, and your return on the spread would be 55% (627% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates February 7, 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
Tags: Auto-Trade, Bull Put Credit Spread, Bullish Options strategies, Calls, Credit Spreads, MCHP, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, SPY, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Volatility, Weekly Options
Posted in 10K Strategies, Credit Spreads, Earnings Announcement Options Strategy, Greeks, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Sunday, February 3rd, 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
PayPal (PYPL) Dips After Earnings, Is it a Buy?
After briefly piercing to record highs, PayPal stock declined following its earnings report in the past week. Is the dip a buying opportunity? The following article provides some solid arguments for why it is – Buy the Dip in Paypal Stock Because $100 Is the Next Stop. Also an article recently published on The Motley Fool makes a compelling argument for growth on the back of rising popularity and potential for PayPal’s app Venmo. In the article, the company’s CEO was quoted as saying the P2P payment app could potentially surpass PayPal’s payment system in profitability – The Big News in PayPal’s Fourth-Quarter Update.
Aside from chart patterns, a significant appeal to PYPL is that it touched record highs this month, fully erasing the prior decline. Not only that, it was the first IBD Top 50 listed stock to do so while most have only recovered a part of the fall that took place late in 2018. In this context, it is certainly an outperformer. Support is found at $87.55 as a horizontal level there has previously acted as both support and resistance dating back to June last year. Note that this level was a major barrier in the fourth quarter. On a weekly chart, the 20-week moving average was the equivalent barrier for Q4. It currently falls near $85.50 to provide additional support in the event of further near-term downside. Just above it, the 50-day moving average is found, currently at $86.14.
PYPL Chartl February 2019
*source Tradingview.com
If you agree there’s further upside ahead for PYPL, 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 PYPL 15MAR19 87.5 Puts (PYPL190315P87.5)
Sell To Open PYPL 15MAR19 90 Puts (PYPL190315P90) for a credit of $0.95 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when PYPL was trading near $90. 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 $92.50 and your broker would charge a $250 maintenance fee, making your investment $157.50 ($250 – $92.50). If PYPL closes at any price above $90 on March 15, both options would expire worthless, and your return on the spread would be 59% (552% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates February 1, 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
Tags: Auto-Trade, Bull Put Credit Spread, Bullish Options strategies, Credit Spreads, Monthly Options, Options Tutorial Program, Portfolio, Profit, Puts, PYPL, Risk, SPY, Stocks vs. Stock Options, Straddles, Strangles, Terry's Tips, thinkorswim, Volatility, Weekly Options
Posted in 10K Strategies, Credit Spreads, Earnings Announcement Options Strategy, Monthly Options, SPY, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Sunday, January 27th, 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
Is the Earnings Dip in Atlassian Corp (TEAM) A Buy Opportunity?
Atlassian is a well-liked stocked by several analysts, not only because of their business model but also the stock price performance. Look at what these two analysts are saying about the company – Software Stock Could Surge Into February and Analysts Hold Stances On Atlassian Following A ‘Ripper’ Of A Quarter.
TEAM turned higher alongside the broader markets in late December and briefly pierced to record highs following their recent earnings release, however, the stock closed about 10% lower after the report. The price action that follows is particularily important as it suggests that bulls remain well in control. First, the stock failed to make a sustained drop below it’s 20-day moving average. Also a rising trend channel remains intact and buyers defended the lower bound of the channel following the post-earnings dip. Lastly, on a weekly chart, TEAM closed at a weekly high for the year in the past week to further support the view that the earnings dip may have been a buying opportunity as opposed to a sell signal.
TEAM Chart January 2019
*source Tradingview.com
If you agree there’s further upside ahead for TEAM, consider this trade which is a bet that the stock will continue to advance over the next seven weeks, or at least not decline very much.
Buy To Open TEAM 15MAR19 90 Puts (TEAM190315P90)
Sell To Open TEAM 15MAR19 95 Puts (TEAM190315P95) for a credit of $1.93 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when TEAM was trading near $96. 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 $190.50 and your broker would charge a $500 maintenance fee, making your investment $309.50 ($500 – $190.50). If TEAM closes at any price above $95 on March 15, both options would expire worthless, and your return on the spread would be 62% (492% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates January 24, 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
Tags: Auto-Trade, Bull Put Credit Spread, Bullish Options strategies, Calls, Credit Spreads, Earnings Option Strategy, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, Straddles, Strangles, TEAM, Terry's Tips, thinkorswim, VIX, Weekly Options
Posted in 10K Strategies, Credit Spreads, Earnings Announcement Options Strategy, Monthly Options, SPY, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios | No Comments »
Sunday, January 20th, 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 Cadence Design Systems (CDNS) Following the Technical Breakout
Several analysts expect more upside from CDNS, here are two of them – Disney and 4 Other Stock Picks from a Parnassus Fund Manager and Why Should You Retain Cadence Stock in Your Portfolio?
CDNS is seeng breaking higher from a triangle pattern which signals a continuation of the broader uptrend, often with a pick up in upside momentum. In addition to the technical break, the stock is one of few on the IBD Top 50 List, and in the broader markets for that matter, that is on the verge of breaking to record highs.
CDNS Chart January 2019
*source Tradingview.com
If you agree there’s further upside ahead for CDNS, 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 CDNS 15FEB19 43 Puts (CDNS190215P43)
Sell To Open CDNS 15FEB19 46 Puts (CDNS190215P46) for a credit of $0.65 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when CDNS was trading near $47. 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 $62.50 and your broker would charge a $300 maintenance fee, making your investment $237.50 ($300 – $62.50). If CDNS closes at any price above $46 on February 15, both options would expire worthless, and your return on the spread would be 26% (380% annualized). Note: Options on CDNS are fairly illiquid, with large bid-ask spreads. It would be especially important to place a limit order rather than a market order here.
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates January 17, 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
Tags: Auto-Trade, Bearish Options Strategies, Bull Put Credit Spread, Bullish Options strategies, Calls, CDNS, Credit Spreads, diagonal spreads, Earnings Option Strategy, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, Straddles, Strangles, Terry's Tips, thinkorswim, Weekly Options
Posted in 10K Strategies, Credit Spreads, Earnings Announcement Options Strategy, Monthly Options, SPY, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Sunday, January 13th, 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 CyberArk Software (CYBR) Continue the Upside Momentum?
The Investor’s Business Daily recently published an article picking out CYBR as one of the 5 best companies that stand to gain as the market rallies, view the full article here. As well, take a look at this article published on Zacks that details CYBR as an outperformer among its peers.
From a technical perspective, the main appeal to CyberArk’s stock is that it’s trading within a rising trend channel while a majority of stocks remain within a declining trend channel, which is an indication of strength. In fact, looking at the CYBR chart alone, it would not be apparent that the broader markets had such a volatile decline in the last two months of 2018. The stock price ended last week near highs and looks to be threatening a break above the December top.
CYBR Chart January 2019
*source Tradingview.com
If you agree there’s further upside ahead for CYBR, consider this trade which is a bet that the stock will continue to advance over the next four weeks, at least a little bit.
Buy To Open CYBR 8FEB19 75 Puts (CYBR19028P75)
Sell To Open CYBR 8FEB19 78 Puts (CYBR19028P78) for a credit of $1.33 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when CYBR was trading near $80. 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 CYBR closes at any price above $78 on February 8, both options would expire worthless, and your return on the spread would be 77% (1124% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates January 10, 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
Tags: Auto-Trade, Bearish Options Strategies, Bull Put Credit Spread, Bullish Options strategies, Calls, Credit Spreads, CYBR, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, SPY, Stocks vs. Stock Options, Straddles, Strangles, Terry's Tips, thinkorswim, Weekly Options
Posted in 10K Strategies, Credit Spreads, Earnings Announcement Options Strategy, Monthly Options, Stock Option Trading Idea Of The Week, Terry's Tips Portfolios, Weekly Options | No Comments »
Sunday, January 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
Will Five9 Inc (FIVN) Break Higher From It’s Range?
Take a look at what these analysts have to say about Five9 – IBD 50 Stocks To Watch: How Cloud, AI Shape Five9’s Software Future and Lookout for these Two stocks: American International Group, Five9 Inc.
Five9 has consolidated higher since hitting a low in late October and is seen trading within a range. The stock is an outperformer as most stocks posted losses in the last two months of the year. A technical pattern is emerging as a triangle can be drawn around the recent consolidation. To the upside, a break above $44.40 would suggest a bullish breakout. There is a confluence of downside support deriving from a rising trendline, the 50-day moving average, as well as a horizontal level. The horizontal level, which resides at $39.55, is considered well respected as it has acted both resistance and support on several occasions since the initial test in June.
*source Tradingview.com
If you agree there’s further upside ahead for FIVN, 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 FIVN 15FEB19 35 Puts (FIVN190215P35)
Sell To Open FIVN 15FEB19 40 Puts (FIVN190215P40) for a credit of $1.18 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when FIVN was trading near $43. 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 $115.50 and your broker would charge a $500 maintenance fee, making your investment $384.50 ($500 – $115.50). If FIVN closes at any price above $40 on February 15, both options would expire worthless, and your return on the spread would be 30% (281% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates January 3, 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
Tags: Auto-Trade, Bull Put Credit Spread, Bullish Options strategies, Calendar Spreads, Calls, Credit Spreads, FIVN, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, Straddles, Terry's Tips, thinkorswim, Volatility, Weekly Options
Posted in 10K Strategies, Credit Spreads, Earnings Announcement Options Strategy, Lazy Way Strategy, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Sunday, December 30th, 2018
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
Kirkland Lake Gold (KL) Follows Gold Prices Higher
Kirkland Lake Gold has been an outperformer among the IBD Top 50 companies, gaining from strength in the price of Gold. Take a look at this article which speculates a significant upside based on a technical outlook – Kirkland Lake Gold Is Shining Bright on the Charts and this following article which discusses the performance of KL as well as other stocks and ETF’s within the same sector – Gold Mining Crushing the Market: Best ETFs & Stocks of Q4.
KL has made a clear break higher this month to trade at record highs. The company stands out when compared to other IBD Top 50 stocks as it is the only one to make a decisive break higher. The main appeal to KL is the recent acceleration in upside momentum which is evident on nearly every time frame. Horizontal support is found near $23 as the level held the stock lower over the summer, however, considering the bullish momentum, investors may look to step in ahead of the level.
KL Chart December 2018
*source Tradingview.com
If you agree there’s further upside ahead for KL, consider this trade which is a bet that the stock will continue to advance over the next seven weeks, or at least not decline very much.
Buy To Open KL 15FEB19 22.5 Puts (KL190215P22.5)
Sell To Open KL 15FEB19 25 Puts (KL190215P25) for a credit of $.93 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when KL was trading near $25. 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 $90.50 and your broker would charge a $250 maintenance fee, making your investment $159.50 ($250 – $90.50). If KL closes at any price above $25 on February 15, both options would expire worthless, and your return on the spread would be 57% (452% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates December 27, 2018
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
Tags: Auto-Trade, Bearish Options Strategies, Bull Put Credit Spread, Bullish Options strategies, KL, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, Straddles, Terry's Tips, thinkorswim, Weekly Options
Posted in 10K Strategies, Credit Spreads, Earnings Announcement Options Strategy, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Sunday, December 23rd, 2018
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 Match Group (MTCH) Continue to Outperform?
Analysts are keeping a close eye on MTCH, take a look at these two articles to see what they are saying about the stock – Worth taking a quick glance: Match Group, Inc. and Match Group Starting to Look Attractive.
The main technical appeal to MTCH is its outperformance relative to the overal markets. Note the stock is about 16% higher to the low posted in late November while SPY dropped abruptly to fresh yearly lows in the past week. As well, the stock boasts a 24% gain for the year, despite the decline from September highs. Major support is found at $33.50 and this level held MTCH higher last month. Support is also seen near $39, reflecting the high ahead of the earnings inspired gap up in August. From a technical standpoint, there is a large gap that should be covered by a $48 price at some point (as the earlier upside gap was eventually covered).
MTCH Chart December 2018
*source Tradingview.com
If you agree there’s further upside ahead for MTCH, consider this trade which is a bet that the stock will continue to advance over the next four weeks, or at least a little bit.
Buy To Open MTCH 18JAN19 36 Puts (MTCH190118P36)
Sell To Open MTCH 18JAN19 39 Puts (MTCH190118P39) for a credit of $1.10 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when MTCH was trading near $39. 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 $300 maintenance fee, making your investment $192.50 ($300 – $107.50). If MTCH closes at any price above $39 on January 18, both options would expire worthless, and your return on the spread would be 56% (818% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates December 20, 2018
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
Tags: Auto-Trade, Bull Put Credit Spread, Bullish Options strategies, Credit Spreads, Monthly Options, MTCH, Options Tutorial Program, Portfolio, profits, Puts, Risk, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Weekly Options
Posted in 10K Strategies, Credit Spreads, Earnings Announcement Options Strategy, Greeks, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Monday, December 17th, 2018
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 Growth Prospects Keep Mastercard (MA) Bid?
Mastercard has had some positive news coverage as of late, take a look at these two articles – Visa & Mastercard: Strong Growth and Dividend Hike Opportunities? And IBD Stock Of The Day Master Shows Strength – And Gives This Market Warning.
As outlined by one of the above articles, MA is currently facing it’s 200-Day moving average. Althought the article points out that the stock technically trades below it, there does not seem to be enough evidence of a clear break, or that bears have taken control. The stock has held above a horizontal level found near $193 found close to the moving average that has acted as both support and resistance on several occasions since May. Dips below this confluence area of support in the recent past have been short-lived, as seen on a monthly chart, where the stock has managed to hold above $197 on a monthly close basis.
MA Chart December 2018
*source Tradingview.com
If you agree there’s further upside ahead for MA, 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 MA 25JAN18 190 Puts (MA190125P190)
Sell To Open MA 25JAN18 192.5 Puts (MA190125P192.5) for a credit of $1.10 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when MA was trading near $195. 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 MA closes at any price above $192.5 on January 25, both options would expire worthless, and your return on the spread would be 75% (702% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates December 13, 2018
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
Tags: Auto-Trade, Bull Put Credit Spread, Bullish Options strategies, Calls, Credit Spreads, Earnings Option Strategy, MA, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Risk, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Weekly Options
Posted in 10K Strategies, Credit Spreads, Earnings Announcement Options Strategy, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Monday, December 10th, 2018
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 Medpace Holdings (MEDP) Break to New All Time Highs?
Medpace Holdings has been getting some media attention as of late, take a look at these two articles to see what analysts are saying about this stock – MEDP vs PRAH: Which Stock Should Value Investors Buy Now? and Bullish Trend Signal for Medpace Holdings.
The technical appeal in MEDP is it’s outperformance compared to the broader markets as well as some of the other stocks on the IBD Top 50 list. MEDP has had a pickup in upside momentum since late October which seems to suggest it has resumed it’s uptrend following a correction. In the past week, the stock saw some sellers near the $64 price point which resulted in a decline towards its 20-day moving average. A break of $64 would have the stock trading at all time highs. The stock appears to be well supported here with further support slightly below the 20-day moving average at $55 which was a level that held it higher after the gap up in late July. As well, there is a rising trendline near the horizontal level that is drawn by connecting the October and November low
MEDP Chart December 2018
*source Tradingview.com
If you agree there’s further upside ahead for MEDP, 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 MEDP 18JAN19 50 Puts (MEDP190118P50)
Sell To Open MEDP 18JAN19 55 Puts (MEDP190118P55) for a credit of $1.33 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when MEDP was trading near $58. 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 MEDP closes at any price above $55 on January 18, both options would expire worthless, and your return on the spread would be 35% (312% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates December 6, 2018
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
Tags: Auto-Trade, Bull Put Credit Spread, Bullish Options strategies, Credit Spreads, diagonal spreads, Earnings Option Strategy, MEDP, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, SPY, Stocks vs. Stock Options, thinkorswim, Weekly Options
Posted in 10K Strategies, Credit Spreads, Earnings Announcement Options Strategy, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
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