from the desk of Dr. Terry F Allen

Skip navigation

Member Login  |  Contact Us  |  Sign Up

802-877-8330

Archive for the ‘Monthly Options’ Category

Dollar General (DG) Stands to Benefit from Post Lockdown Sales Boost

Monday, June 29th, 2020

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

Check out the following two articles which have positive things to say about Dollar General – Top Consumer Staples Stocks for July 2020 and  Record Retail Sales Lead Post-Lockdown Recovery: 5 Winners. The first article highlights DG as one of the fastest growing consumer staples stocks based on its earnings per share ratio. The second article discusses why DG is one of five stocks that stands to gain because of lockdown easing measures.

Technicals

There are a number of things that signal strength in DG. The stock was quick to recover from the Coronavirus inspired push lower in March, and it didn’t take long for it to break to a fresh record high. Compare this to the S&P 500 which has yet to fully recover its losses from March. Further, DG has been able to continue the upward momentum since breaking to a record high in April, and dips have been shallow since. There is an upward trend channel that has encompassed price action for nearly three months now and it points to strong support at $186.

DG Chart June 2020 top 5 covid sales

DG Chart June 2020

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, or at least not decline very much.

Buy To Open DG 31JUL20 182.5 Puts (DG200731P182.5)
Sell To Open DG 31JUL20 187.5 Puts (DG200731P187.5) for a credit of $1.78 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when DG was trading near $189.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $176.70 and your broker would charge a $500 maintenance fee, making your investment $323.30 ($500 – $176.70).  If DG closes at any price above $187.5 on July 31, 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 June 27, 2020

IBD Underlying Updates June 27, 2020

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

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

Happy trading,

Terry

Zoom Video Communications (ZM) Remains a Top Performer in Today’s Markets

Monday, June 1st, 2020

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

Zoom Video was criticized a few months back for security and other concerns, but nevertheless, the stock continued higher. It looks even more appealing now as the company continues to gain market share and the prior concerns are no longer weighing on the company’s stock price. Several analysts share the same bullish outlook, here are two of them – Here’s Why Zoom Stock Has Been Soaring — and What to Expect Going Forward and Hedge Funds Have Never Been This Bullish On Zoom Video Communications, Inc. (ZM).

Technicals

From a technical perspective, ZM has been held higher by a rising trendline for most of the year. The stock tested this trendline in the past week and in a matter of days it was on the verge of breaking to an all-time high. The stock has been well bought on dips in general and the momentum is firm to the upside. The $180 level could prove to be a short-term hurdle but there is little reason to believe this stock will not break to all-time highs.

ZM Chart June 2020 COVID stocks surge

ZM Chart June 2020

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

Buy To Open ZM 10JUL20 177.5 Puts (ZM200710P177.5)
Sell To Open ZM 10JUL20 180 Puts (ZM200710P180) for a credit of $1.33 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when ZM was trading near $180.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $131.70 and your broker would charge a $250 maintenance fee, making your investment $118.30 ($250 – $131.70).  If ZM closes at any price above $180 on July 10, both options would expire worthless, and your return on the spread would be 111% (1266% annualized).

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

IBD Underlying Updates May 30, 2020

IBD Underlying Updates May 30, 2020

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

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

Happy trading,

Terry

Green Lights are Flashing for Merck & Co (MRK)

Monday, December 16th, 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.

Merck has been in the spotlight because of a recent acquisition and as several biotech’s have produced outsized gains as of late. The following two articles discuss the acquisition and how MRK is a better option compared to one of its peers – Merck: Adding To The Pipeline and Better Buy: Eli Lilly vs. Merck.

Technicals

The recent technical development in MRK is a significant one. The stock has broken above a horizontal resistance level at $87 that had held it lower on three notable attempts since the summer. Such a consolidation, followed by a break,, is often a precursor to a much larger move to come. With the stock still trading relatively close to its breakout point there is good value as technical traders usually look to defend breakout points if they were to be retested.

MRK Chart December 2019 broken resistence level

MRK Chart December 2019

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

Buy To Open MRK 17JAN20 87.5 Puts (MRK200117P87.5)
Sell To Open MRK 17JAN20 90 Puts (MRK200117P90) for a credit of $0.92 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when MRK was trading near $89.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $90.70 and your broker would charge a $250 maintenance fee, making your investment $159.30 ($250 – $90.70).  If MRK closes at any price above $90 on January 17, 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 December 14, 2019 via Terry's Tips

IBD Underlying Updates December 14, 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

Jazz Pharmaceuticals (JAZZ) – A Pharma Stock on a Tear

Monday, December 9th, 2019

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

Recent media coverage suggests Jazz Pharmaceuticals is a stock that investors certainly want to own. Check out what these two articles have to say about it – Hedge Funds Got Back Into Jazz Pharmaceuticals plc and  Two stocks I’d tuck away forever: Jazz Pharmaceuticals plc (JAZZ), HollyFrontier Corporation (HFC).

Technicals

JAZZ is showing a textbook technical breakout. The stock traded between roughly $115 and $145 for most of the year before finally breaking higher in November. The $145 price point offered major resistance in April and July and is now seen as support. In fact, a dip toward the level in the past week was promptly bought up, offering some confirmation that buyers do view the level as support. Further, the upward momentum from the October low is unusually strong which also confirms the outlook of a technical breakout.

JAZZ Pharmaceuticals Chart December 2019

JAZZ Chart December 2019

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

Buy To Open JAZZ 17JAN20 145 Puts (JAZZ200117P145)
Sell To Open JAZZ 17JAN20 150 Puts (JAZZ200117P150) for a credit of $2.18 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when JAZZ was trading near $149.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $216.70 and your broker would charge a $500 maintenance fee, making your investment $283.30 ($500 – $216.70).  If JAZZ closes at any price above $150 on January 17, both options would expire worthless, and your return on the spread would be 76% (711% annualized).

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

IBD Underlying Updates December 7, 2019

IBD Underlying Updates December 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

MOMO Inc. (MOMO) – A Growth Stock That Offers Value

Monday, December 2nd, 2019

Momo Inc. has been getting positive media coverage as of late, check out what these two analysts had to say about the stock – 3 Undervalued Mid-Cap Stocks That Score a “Perfect 10” and Better Buy: Momo vs. Huya.

Technicals

The technicals sure look good for MOMO as the stock is seen breaking out of a consolidation pattern that had contained price action since around April. The stock broke upward from the triangle pattern in early November and showed strong buying on a dip to retest the pattern in the past week.Further, the stock trades comfortably above the 50, 100, and 200-day moving averages which have all converged between $34-$35.

MOMO Chart December 2019 options spread

MOMO Chart December 2019

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, at least a little bit.

Buy To Open MOMO 03JAN20 35 Puts (MOMO200103P35)
Sell To Open MOMO 03JAN20 37.5 Puts (MOMO200103P37.5) for a credit of $0.93 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when MOMO was trading near $37.5.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $91.70 and your broker would charge a $250 maintenance fee, making your investment $158.30 ($250 – $91.70).  If MOMO closes at any price above $37.5 on January 03, both options would expire worthless, and your return on the spread would be 58% (662% annualized).

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

IBD Underlying Updates November 30, 2019

IBD Underlying Updates November 30, 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

J2 Global (JCOM) – A Little-Known Stock Showing a lot of Strength

Monday, November 25th, 2019

There was an article published about J2 Global on SeekingAlpha in July that was titled “J2 Global is a Sleeper”. There’s a lot of truth to this, this stock is not very well known or covered in media but from the articles that are written about the company, quite a few of them have good things to say about it. Here are two of them – J2 Global’s Charts Send Bullish Signals and J2 Global (JCOM) Stock Analysis offering an attractive story

Technicals

JCOM has broken higher from a major technical pattern. The weekly chart below shows that the roughly $91 price point offered a major hurdle since the stock price first approached it in early 2017. After consolidating in a range below the level for more than two years, it finally broke higher last month. In the past week, there has been a pullback, offering an attractive entry with major support from the breakout point nearby. Breakouts like this tend to signal a significant upside considering it is on a weekly chart. The technical break should create demand among technical traders and keep the stock price bid, likely even ahead of the $91 breakout point.

JCOM Chart November 2019 vertical options spread

JCOM Chart November 2019

If you agree there’s further upside ahead for JCOM, 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 JCOM 20DEC19 90 Puts (JCOM191220P90)
Sell To Open JCOM 20DEC19 95 Puts (JCOM191220P95) for a credit of $1.48 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when JCOM was trading near $95.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $146.70 and your broker would charge a $500 maintenance fee, making your investment $353.30 ($500 – $146.70).  If JCOM closes at any price above $95 on December 20, both options would expire worthless, and your return on the spread would be 42% (613% annualized).

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

IBD Underlying Updates November 23, 2019

IBD Underlying Updates November 23, 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

Is CBRE Group (CBRE) on the Verge of a Breakout?

Monday, November 11th, 2019

According to the following article, CBRE is one of the two most actively traded stocks in the Property Management industry. Further, out of the two, they believe it offers better value – CBRE Group, Inc. (CBRE) and Fortive Corporation (FTV) Go Head-to-head. While CBRE’s stock price came under a bit of pressure following its latest earnings report, there were some positive takeaways from it. The main one being an upgrade in earnings per share estimates among analysts. Full details can be found here – CBRE Group, Inc. Third-Quarter Results Just Came Out: Here’s What Analysts Are Forecasting For Next Year

CBRE’s stock price is trading in an ascending triangle which is considered a continuation pattern. The price reaction from the company’s recent earnings report was not positive, however, the decline was brief and well supported by the 100-day moving average. More importantly, the stock has since recovered to nearly fully erase the loss which is a sign of strength. These things combined offer a bullish signal and if the stock breaks above triangle resistance around $56, it could enter into a technical breakout.

CBRE Chart November 2019 vertical options spread

CBRE Chart November 2019

If you agree there’s further upside ahead for CBRE, 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 CBRE 20DEC19 50 Puts (CBRE191220P50)
Sell To Open CBRE 20DEC19 55 Puts (CBRE191220P55) for a credit of $1.18 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when CBRE was trading near $55.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $116.70 and your broker would charge a $500 maintenance fee, making your investment $383.30 ($500 – $116.70).  If CBRE closes at any price above $55 on December 20, both options would expire worthless, and your return on the spread would be 30% (262% annualized).

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

IBD Underlying Updates November 9, 2019

IBD Underlying Updates November 9, 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

PayPal (PYPL) Is Set To Resume Its Bullish Trend

Monday, November 4th, 2019

Recent headlines are suggesting that now might be a good time to get into PYPL, take a look at what these two analysts are saying about the stock – Why I Just Bought PayPal Stock and PayPal’s Momentum Is Spreading Across the World.

Technicals

There are several recent developments that signal PayPal’s stock may have resumed within its broader bullish trend. For starters, the stock has regained its 50-day moving average. This is an indicator that PYPL traded below for much of the correction that started in July. There is a horizontal level near the moving average that is currently creating a nice support confluence. This level falls near $104 and originates from a low posted in late May. Perhaps the strongest signal is that the stock is bouncing from the 50-week moving average, this is an indicator the stock has not traded below on a sustained basis for at least 5 years. Further, a bullish reversal candlestick has printed on both a weekly and monthly chart.

PYPL Chart November 2019 vertical options spread

PYPL Chart November 2019

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, at least a little bit.

Buy To Open PYPL 06DEC19 102 Puts (PYPL191206P102)
Sell To Open PYPL 06DEC19 105 Puts (PYPL191206P105) for a credit of $1.13 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when PYPL was trading near $105.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $111.70 and your broker would charge a $300 maintenance fee, making your investment $188.30 ($300 – $111.70).  If PYPL closes at any price above $105 on December 06, both options would expire worthless, and your return on the spread would be 59% (673% annualized).

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

IBD Underlying Updates November 2, 2019 options strategy

IBD Underlying Updates November 2, 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

Visa (V) Regains Momentum Following Earnings Report

Monday, October 28th, 2019

Visa’s earnings report in the past week has boosted sentiment among analysts. The following two articles include two upward price target revisions and a case for why the stock can continue to strengthen from here – Visa Analysts Encouraged By Q4 Results, 2020 Guidance and Visa stock gains after forecast paints a picture of continued strength in 2020.

The rally that followed the earnings report has lifted Visa’s stock back above all of the commonly looked at moving averages (20, 50 & 100-day). What’s appealing about V is the long-term trend and that dips have been shallow over the year which points to strong demand. There was a correction lower since early September, but the post-earnings upward momentum suggests the stock may have resumed within its broader uptrend.

Visa Chart October 2019 vertical options spread

Visa Chart October 2019

If you agree there’s further upside ahead for V, 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 V 29NOV19 175 Puts (V191129P175)
Sell To Open V 29NOV19 177.5 Puts (V191129P177.5) for a credit of $0.99 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when V was trading near $178.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $97.05 and your broker would charge a $250 maintenance fee, making your investment $152.30 ($250 – $97.05).  If V closes at any price above $177.5 on November 29, both options would expire worthless, and your return on the spread would be 63% (730% annualized).

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

IBD Underlying Updates October 26, 2019

IBD Underlying Updates October 26, 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

Synchrony Financial (SYF) Gets a Boost From its Latest Earnings Report

Monday, October 21st, 2019

Synchrony Financial rallied to a two-month high in the past week and several analysts think it can continue higher. Here is what the IBD had to say about the stock – This GE Spinoff Nears Buy Point On Strong Earnings. Also take a look at the following article which discusses Warren Buffett’s stake in the company – Here is What Hedge Funds Think About Synchrony Financial (SYF).

SYF recently regained both its 50 and 100 day moving averages which signals the broader bullish trend has potentially restarted. Of the two, the 100-day moving average was particularly strong resistance throughout September. For this reason, the indicator is now seen as strong support on near-term dips. The break above the 100-day moving average also means a break above the September high which in turn has set a successions of higher highs and higher lows. Another way to look at it is as a range breakout since the stock was essentially consolidating sideways above its 200-week moving average for the past two months or so.

SYF Chart October 2019 vertical options spread

SYF Chart October 2019

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

Buy To Open SYF 22NOV19 31.5 Puts (SYF191122P31.5)
Sell To Open SYF 22NOV19 34.5 Puts (SYF191122P34.5) for a credit of $0.93 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when SYF was trading near $34.50.  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 $1.30 per spread.  Each contract would then yield $91.70 and your broker would charge a $300 maintenance fee, making your investment $208.30 ($300 – $91.70).  If SYF closes at any price above $34.50 on November 22, both options would expire worthless, and your return on the spread would be 44% (502% annualized).

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

IBD Underlying Updates October 19, 2019

IBD Underlying Updates October 19, 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

Making 36%

Making 36% — A Duffer's Guide to Breaking Par in the Market Every Year in Good Years and Bad

This book may not improve your golf game, but it might change your financial situation so that you will have more time for the greens and fairways (and sometimes the woods).

Learn why Dr. Allen believes that the 10K Strategy is less risky than owning stocks or mutual funds, and why it is especially appropriate for your IRA.

Order Now

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