Archive for the ‘Earnings Announcement Options Strategy’ Category
Sunday, November 25th, 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
Should You Buy the Post Earnings Dip in Charles River Laboratories (CRL)?
Recent price target upgrades suggest more upside for CRL. Take a look at these two articles that contain the details – Charles River Laboratories PT Raised to $148.00 at Robert W. Baird and Charles River Laboratories Given a $147 Price Target at Royal Bank of Canada.
CRL has been contained within a rising trend channel for just over a year now. A spike higher following their latest earnings report was met with sellers at the top of the channel, resulting in a dip back to roughly the halfway point. Support is found at $125 which was where the stock was trading prior to the earnings inspired gap up. CRL has been outperforming the broader markets as it traded at record highs just a few weeks ago. The trend remains healthy, technically speaking, on a daily chart and higher time frames and there have not been any technical indications that the uptrend won’t continue.
CRL Chart November 2018
*source Tradingview.com
If you agree there’s further upside ahead for CRL, 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 CRL 21Dec18 120 Puts (CRL181221P120)
Sell To Open CRL 21Dec18 125 Puts (CRL181221P125) for a credit of $1.53 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when CRL was trading near $127. 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 $150.50 and your broker would charge a $500 maintenance fee, making your investment $349.50 ($500 – $150.50). If CRL closes at any price above $125 on December 21, both options would expire worthless, and your return on the spread would be 43% (581% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates November 22, 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, CRL, diagonal spreads, Earnings Option Strategy, Monthly Options, Portfolio, Profit, Puts, 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 »
Sunday, November 18th, 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 Motorola Solutions (MSI) Continue to Outperform?
Investors have many reasons to remain bullish Motorola Solutions including a recent dividend hike as well as an upgrade accompanied with a raised price target. Take a look at the following articles for details – Motorola Rewards Shareholders With 9.6% Dividend Hike and Motorola Solutions Upgraded to Buy by Zacks Investment Research.
The main appeal from a technical perspective is the outperfomance of Motorla stock versus the S&P 500. This was first seen in late October when MSI bottomed very near to its mid-month low. Recent price action appears much more obvious as the equity index turned lower on November 8 while MSI managed to hold near highs. There seems to be a small hurdle near $130, but after several attempts bears have failed to elicit a downturn. This is especially significant considering that equities were broadly weaker during the period this resistance level was being tested. Considering the overall trend and the strength displayed as of late, the odds favor an upside break. The below chart has an overlay of the S&P 500 to illustrate the recent divergence.
MSI Chart November 2018
*source Tradingview.com
If you agree there’s further upside ahead for MSI, 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 MSI 21DEC18 125 Puts (MSI181221P125)
Sell To Open MSI 21DEC18 130 Puts (MSI181221P130) for a credit of $1.84 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when MSI was trading near $130. 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 $181.50 and your broker would charge a $500 maintenance fee, making your investment $318.50 ($500 – $181.50). If MSI closes at any price above $130 on December 21, 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 November 15, 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, Monthly Options, MSI, Portfolio, Profit, Puts, 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 »
Sunday, November 11th, 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
Xilinx (XLNX) Surges to Fresh Yearly Highs, What’s Next?
Xilinx has been receiving a lot of media attention as of late, these two articles shed some light on what analysts are expecting from the company – What Makes Xilinx a Strong Momentum Stock: Buy Now? And Has Xilinx Outpaced Other Computer and Technology Stocks This Year?
XLNX reversed sharply higher a few weeks back after their earnings report exceeded expectations. Since then, the stock price regained it’s 20-day moving average, and more importantly, broke to a fresh 18-year high to clearly signal that bulls are in control. A consolidation has taken place over the past week which is common following an important techincal break and most often precedes a continuation in the direction of the trend.
XLNX Chart November 2018
*source Tradingview.com
If you agree there’s further upside ahead for XLNL, 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 XLNL 21DEC18 82.5 Puts (XLNL181221P82.5)
Sell To Open XLNL 21DEC18 85 Puts (XLNL181221P85) for a credit of $1.05 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when XLNL was trading near $86. 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 $102.50 and your broker would charge a $250 maintenance fee, making your investment $147.50 ($250 – $102.50). If XLNL closes at any price above $85 on December 21, both options would expire worthless, and your return on the spread would be 69% (681% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates November 8, 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, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Weekly Options, XLNX
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, November 4th, 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.
Last week was a great one for the market (SPY up 2.6%) and an even better one for the Terry’s Tips 8 actual option portfolios. Every one made gains, and the composite average picked up 11%, a record we are quite proud of.
Terry
Consider Kirkland Lake Gold (KL), A Gold Mining Growth Stock
The Investor’s Business Daily recently posted an article which started out by stating “Gold might not come to mind first when you think of growth stocks” which is very true. Take a look at this article for the full write up and the reasoning behind why they see growth potential in this stock. Also check out Kirkland Lake Gold Receives Consensus Rating of “Buy” from Analysts.
KL corrected lower ahead of earnings and was mostly flat following it. The technical significance is that the stock managed to hold above a triple confluence of support derived from a rising trendline, the 50-day moving average, as well as a horizontal support level. Also significant is the prior correction that took place in late summer that was held higher by the 200-day moving average. These developments suggests that
bulls remain firmly in control from a technical perspective while the close proximity of the current price to support offers an attractive entry point. It’s worth mentioning that the correlation between this stock and the price of Gold has strengthened since last month and that Gold appears to be carving out a bottom, at least a near-term one.
KL Chart November 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 six weeks, or at least not decline very much.
Buy To Open KL 21DEC18 17.5 Puts (KL181221P17.5)
Sell To Open KL 21DEC18 20 Puts (KL181221P20) for a credit of $0.78 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when KL was trading near $20.00. 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 KL closes at any price above $20 on December 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:
IBD Underlying Updates November 1, 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, Earnings Option Strategy, implied volatility, KL, Monthly Options, Portfolio, Profit, profits, Puts, 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 »
Sunday, October 28th, 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.
Last week was an awful one for the market. SPY fell 4% after whip-sawing both up and down all week. Most option portfolios probably suffered as well. We were delighted that our newest portfolio which trades options on MSFT notched a gain of 20.4% for this otherwise bad week for the market. Chalk up another victory for well-executed option strategies.
Terry
Can PayPal (PYPL) Continue It’s Earnings-Driven Momentum?
PayPal received a recent boost from it’s earnings report and these Seeking Alpha articles suggest it can continue the upside momentum – PayPal: It’s A Buy and It’s Not Too Late To Buy PayPal.
Payal appears to be supported near the $83 price point which was where the stock gapped up to following their earnings report earlier this month. The 20 and 50-day moving averages are converging in this area as well to offer further technical support. In the event of a dip lower, further support near the psychological $80 handle is likely to trigger strong buying as technical traders often look to position following a gap close.
PYPL Chart October 2018
*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 five weeks, or at least not decline very much.
Buy To Open PYPL 30NOV18 80 Puts (PYPL181130P80)
Sell To Open PYPL 30NOV18 83 Puts (PYPL181130P83) for a credit of $1.06 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when PYPL was trading near $83. 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 $103.50 and your broker would charge a $300 maintenance fee, making your investment $196.50 ($300 – $103.50). If PYPL closes at any price above $83 on November 30, both options would expire worthless, and your return on the spread would be 53% (605% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates October 25, 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 Announcement, Monthly Options, Portfolio, Profit, profits, Puts, PYPL, Risk, 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, October 22nd, 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 Dollar General Power to Record Highs?
DG is one of the few stocks on the IBD Top 50 list that is on the verge of breaking to record highs. These two articles may help to explain what the driving force behind the momentum is Can Continued Growth Fuel Dollar General Corporation To Reach New Levels? and Sturdy Comps, Better Pricing to Propel Dollar General’s Sales
Technical strength in DG is seen best via correlation when looking at growth stocks and US equity indices. As well, the stock appears to have recently broken above a bullish flag pattern, climbing above the 50-day moving average in the process. DG ended the past week holding support near 109 and shows further support from a strong confluence found just above 107.
DG Chart October 2018
*source Tradingview.com
If you agree there’s further upside ahead for DG, 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 DG 23NOV18 105 Puts (DG181123P105)
Sell To Open DG 23NOV18 110 Puts (DG181123P110) for a credit of $1.75 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when DG was trading near $110. 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 $172.50 and your broker would charge a $500 maintenance fee, making your investment $327.50 ($500 – $172.50). If DG closes at any price above $110 on November 23, both options would expire worthless, and your return on the spread would be 53% (605% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates October 18, 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, DG, Monthly Options, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, TastyWorks, 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, October 7th, 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
Should You Buy The Dip in Dave & Buster’s (PLAY)?
Several analysts see Dave & Buster’s stock price continuing higher, here are two of them – Dave & Buster’s Entertainment Upgraded by Zacks Investment Research to “Buy” and Dave & Buster’s Entertainment Price Target Raised to $70.00.
From a technical perspective, PLAY is seen bouncing from a confluence of support derived from the 20-day moving average and a horizontal level at $62.50. Further support is seen slightly below the confluence area from a rising trendline that originates from a low posted in late July.
PLAY Chart October 2018
*source Tradingview.com
If you agree there’s further upside ahead for PLAY, 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 PLAY 9NOV18 60 Puts (PLAY18119P60)
Sell To Open PLAY 9NOV18 63 Puts (PLAY18119P63) for a credit of $1.03 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when PLAY was trading near $64. 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 $100.50 and your broker would charge a $300 maintenance fee, making your investment $199.50 ($300 – $100.50). If PLAY closes at any price above $63 on November 9, both options would expire worthless, and your return on the spread would be 50% (570% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates October 4, 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, Earnings Option Strategy, Monthly Options, Options Tutorial Program, PLAY, Portfolio, Profit, profits, Puts, Risk, 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, September 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. The actual Terry’s Tips portfolio that trades most of these ideas started out 2018 with $5000. Along the way, we withdrew the entire $5000 from the portfolio so subscribers who were following it would have all their money back and be playing with their profits. The portfolio is now worth $4980 which is pretty darn close to doubling their money in nine months. Other portfolios we conduct for paying subscribers have done better, but we are proud of this one as well.
Terry
Momo inc. (MOMO): A Growth Stock for Value Investors
It’s rare to see a growth stock that is offered at good value, this article makes a compelling case that MOMO falls into that category – Have Investors Priced in Momo Inc’s Growth? and the following article provides several additional reasons for why we may see more upside – One Chart Tells You All You Need to Know About Where MOMO Stock Is Going.
MOMO Chart September 2018
The technical outlook for MOMO points to strong downside support and highlights upside potential. The stock closed on Friday above a confluence of support which includes the 50-day moving average, a horizontal level at $43.17 as well as the lower bound of a rising trend channel that has encompassed price action for the past month. Also, in candlestick analysis, Friday’s candle has taken the shape of what is commonly known has a bullish hammer candle. This signals a strong hold of support and potential for a reversal from the recent eight-day correction.
*source Tradingview.com
If you agree there’s further upside ahead for MOMO, 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 MOMO 02Nov18 41 Puts (MOMO181102P41)
Sell To Open MOMO 02Nov18 43.5 Puts (MOMO181102P43.5) for a credit of $1.00 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when MOMO was trading near $144. 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 $250 maintenance fee, making your investment $152.50 ($250 – $97.50). If MOMO closes at any price above $43.50 on November 02, both options would expire worthless, and your return on the spread would be 64% (730% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates September 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, Bull Put Credit Spread, Bullish Options strategies, Credit Spreads, MOMO, Monthly Options, Portfolio, Profit, Puts, 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 »
Sunday, September 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
Consider Buying the Post-Earnings Dip in Adobe Systems (ADBE)
Adobe’s stock price has seen a steady rise over the last few years, and from both a technical and fundamental standpoint, there is a strong case to be made that it will continue. These following two articles discuss the recent earnings report and where the stock may go from here – Adobe: Stock Marches Forward With Another Record Quarter and Should You Buy Adobe Systems at Its All-Time High?. As well, there have been several price target upgrades as of late and a few of the more bullish analysts think the stock can even cross above the $300 price point.
ADBE Chart September 2018 Adobe
ADBE corrected lower in the past week and is seen trading near a significant confluence of support. The 50-day moving average is coming into play, a horizontal level at $256 that was respected as both support and resistance last month, and two rising trend channels. The small channel formation originates from a low posted in late July while the longer term trend channel has encompassed price action for a few days short of a year.
If you agree there’s further upside ahead for ADBE, consider this trade which is a bet that the stock will continue to advance over the next five weeks, or at least not decline very much.
Buy To Open ADBE 26OCT18 255 Puts (ADBE181026P255)
Sell To Open ADBE 26OCT18 260 Puts (ADBE181026P260) for a credit of $1.97 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when ADBE was trading near $261. Unless the stock rallies quickly from here, you should be able to get close to this amount.
Your commission on this trade will be $2.50 per spread. Each contract would then yield $194.50 and your broker would charge a $500 maintenance fee, making your investment $305.50 ($500 – $194.50). If ADBE closes at any price above $260 on October 26, both options would expire worthless, and your return on the spread would be 64% (730% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates September 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: ADBE, Auto-Trade, Bullish Options strategies, Credit Spreads, Earnings Option Strategy, Monthly Options, Portfolio, Profit, profits, Risk, Stocks vs. Stock Options, TastyWorks, 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 »
Saturday, September 15th, 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. The actual portfolio that Terry’s Tips carries out with these plays we send to you each week has gained 98.5% so far this year. We started out 2018 with $5000 in the portfolio and withdrew that amount in June so that subscribers who mirrored it in their own account or had trades executed for them with the free Auto-Trade service at thinkorswim have almost $5000 left and it is entirely profits for them.
Terry
Has Netflix (NFLX) Found A Bottom?
Despite a recent correction, market sentiment towards Netflix stock remains positive while certain analysts see a notable upside from current levels. Take a look at this recent article posted on Investopedia that states a 30% rally could be in the cards for NFLX and the following article posted on Seeking Alpha that builds a strong case for remaining bullish.
There are several technical developments over the last month or so that suggest Netflix has turned bullish once again. The stock price is seen climbing above horizontal resistance at $356 and holding above the 20-day moving average. Aside from that, a recent convergence with the S&P 500 might be sending the strongest signal of all. Note that NFLX diverged from the index for about a month starting from mid-July to correct lower. Since around the middle of August, the stock price has once regained its correlation with the popular index, which is often a tell that an important bottom might be in place. The S&P 500 is added to the chart below and denoted in bars to illustrate the divergence and subsequent convergence.
NFLX Chart September 2018
*source Tradingview.com
If you agree there’s further upside ahead for NFLX, 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 NFLX 12OCT18 362.5 Puts (NFLX181012P362.5)
Sell To Open NFLX 12OCT18 365 Puts (NFLX181012P365) for a credit of $1.18 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when NFLX was trading near $365. 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 $250 maintenance fee, making your investment $134.50 ($250 – $115.50). If NFLX closes at any price above $365 on October 12, both options would expire worthless, and your return on the spread would be 86% (1256% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates September 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, Monthly Options, NFLX, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, TastyWorks, 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 »
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