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Archive for the ‘Stock Option Trading Idea Of The Week’ Category

Should You Buy the Dip in Adobe (ADBE)?

Monday, September 23rd, 2019

The following two articles certainly suggest Adobe is a good buy on the current dip – Adobe: Timely Buying Opportunity and Adobe: Take Advantage of Bearishness to Buy a High-Quality Stock Cheaper.

From a technical perspective, ADBE is testing a major support confluence. The confluence consists of a horizontal line at $275 as well as the 200-day moving average. The horizontal level was major resistance that held the stock lower in 2018 and it is now seen as support. There has been some evidence of the support area holding so far but a break above recent highs around $285 would provide further confirmation.

ADBE Chart September 2019 verticle options spread

ADBE Chart September 2019

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

Buy To Open ADBE 25OCT19 275 Puts (ADBE191025P275)
Sell To Open ADBE 25OCT19 277.5 Puts (ADBE191025P277.5) for a credit of $0.95 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when ADBE was trading near $278.  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 ADBE closes at any price above $277.5 on October 25, 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 September 21, 2019 options trading ideas

IBD Underlying Updates September 21, 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

Boot Barn (BOOT): A Momentum Stock That Has More Than Doubled in 2019

Monday, September 16th, 2019

After already doubling this year, one analyst expects that it can do it again. Take a look at the full article here – Boot Barn: Another Doubling Is Possible. Also take a look at the following article which makes the case for continued steady gains in BOOT – Two stocks I’d tuck away forever: Boot Barn Holdings (BOOT), Canadian Solar (CSIQ).

Boot Barn stock has been rallying strongly higher since the start of the year and a rising trend channel has encompassed price action. There were three major tests of the lower bound of said channel since August and buyers have defended each one of them. With the price now firmly above all the commonly looked at moving averages, it appears safe to say that buyers are in control. Technical support for near-term dips is found at $33.19. The area is considered significant as a confluence resides there. It contains a horizontal level, the 20-day moving average, and the 50-day moving average.

BOOT Chart September 2019 verticle options spread

BOOT Chart September 2019

If you agree there’s further upside ahead for BOOT, 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 BOOT 18OCT19 30 Puts (BOOT191018P30)
Sell To Open BOOT 18OCT19 35 Puts (BOOT191018P35) for a credit of $1.23 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when BOOT was trading near $36.  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 $120.50 and your broker would charge a $500 maintenance fee, making your investment $379.50 ($500 – $120.50).  If BOOT closes at any price above $35 on October 18, both options would expire worthless, and your return on the spread would be 32% (365% annualized).

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

IBD Underlying Updates September 14, 2019 weekly trade idea

IBD Underlying Updates September 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

CDW Corp. (CDW) Is Poised to Break to Fresh Record Highs

Monday, September 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.

CDW Corp. (CDW) Is Poised to Break to Fresh Record Highs

Several Analysts are optimistic about CDW’s outlook, take a look at what there two publications have to say – Is CDW (CDW) Outperforming Other Computer and Technology Stocks This Year? And With EPS Growth And More, CDW (NASDAQ:CDW) Is Interesting.

The most impressive part of CDW is how steadily it has been rising throughout the year. Dips in the stocks price are shallow and appear to be quickly bought up. A rising trend channel has encompassed price action and there are several layers of downside support. The first is a horizontal level that comes in just above $116. Further support comes from the 50-day moving average, currently near $113.50. The moving average is near the bottom of the trend channel and therefore is considering to be major support.

CDW Chart September 2019 verticle options spread

CDW Chart September 2019

If you agree there’s further upside ahead for CDW, 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 CDW 18OCT19 110 Puts (CDW191018P110)
Sell To Open CDW 18OCT19 115 Puts (CDW191018P115) for a credit of $1.18 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when CDW was trading near $118.  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 CDW closes at any price above $115 on October 18, 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 September 5, 2019 weekly trade idea

IBD Underlying Updates September 5, 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

Five Below (Five) Recovers in August and Offers a Buy Signal

Monday, September 2nd, 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.

Five Below (Five) Recovers in August and Offers a Buy Signal

Five Below reported earnings in the past week which led to an upside break. Take a look at the following article for more details – What Five Below Wants Investors to Know. Also check out this article which discusses a recent price target upgrade from the Royal Bank of Canada – Five Below (NASDAQ:FIVE) Shares Gap Up Following Analyst Upgrade.

There have been quite a few technical developments in FIVE over the last few weeks. To start, the stock was correcting lower from a high in late April and this decline was contained within a descending trend channel. There was an upside break of this channel after the earnings report in the past week which offers a bullish signal. The stock has regained its 50 and 200-day moving averages which is also very positive. On a monthly chart, FIVE has posted a reversal candlestick pattern as it closed in the green in August to snap a prior three consecutive month decline.

FIVE Chart September 2019

FIVE Chart September 2019

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

Buy To Open FIVE 04OCT19 117 Puts (FIVE191004P117)
Sell To Open FIVE 04OCT19 122 Puts (FIVE191004P122) for a credit of $1.85 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when FIVE was trading near $123.  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 $182.50 and your broker would charge a $500 maintenance fee, making your investment $317.50 ($500 – $182.50).  If FIVE closes at any price above $122 on October 4, 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 August 29, 2019

IBD Underlying Updates August 29, 2019

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

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

Happy trading,

Terry

Will Paycom Software (PAYC) Continue to Outperform?

Monday, August 26th, 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 Paycom Software (PAYC) Continue to Outperform?

PAYC has performed incredibly well this year and has significantly outperformed the markets since early August. These two analyst are expecting more upside for the stock – Why Paycom Software, Inc. (NYSE:PAYC) Looks Like A Quality Company and Is Paycom Software (PAYC) Stock Outpacing Its Computer and Technology Peers This Year?

From a technical standpoint, PAYC recently broke to record highs after climbing above resistance at $245. There is now a bit of a support confluence near the horizontal level as a rising trendline falls close to it. The stock shows strength via correlation as it has outperformed the broader markets and most of the stocks on the IBD Top 50 list. The chart below shows performance against the S&P 500 (SPY) which is marked by the gray line. Despite the index trading heavy this month, PAYC has not only manage to rally, but it has done so to new record highs which is impressive to say at the least.

PAYC Chart August 2019 verticle options spread

PAYC Chart August 2019

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

Buy To Open PAYC 20SEP19 240 Puts (PAYC190920P240)
Sell To Open PAYC 20SEP19 250 Puts (PAYC190920P250) for a credit of $4.13 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when PAYC was trading near $249.  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 $410.50 and your broker would charge a $1000 maintenance fee, making your investment $589.50 ($1000 – $410.50).  If PAYC closes at any price above $250 on September 20, both options would expire worthless, and your return on the spread would be 70% (798% annualized).

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

IBD Underlying Updates August 22, 2019

IBD Underlying Updates August 22, 2019

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

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

Happy trading,

Terry

Visa (V) Dips – Is it Time to Get In?

Monday, August 19th, 2019

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

Terry

Visa (V) Dips – Is it Time to Get In?

One analyst recently wrote an article titled Load Up On Visa which is the type of thing usually said when there is a sharp fall in the stock discussed, in the context that it is being offered at a discount. This is certainly not the case with Visa as the correction a few weeks back was much more shallow when compared to other stocks in the sector. The headline goes to show just how positive sentiment is. Also take a look at the following article which discusses Visa’s performance compared to its sector – Is Visa (V) Stock Outpacing Its Business Services Peers This Year?

From a technical perspective, the stock dipped lower in the early month but caught a strong bid near support to erase losses. There is a horizontal level in play at $172 which seems to have been respected by the market. If offered resistance in early June, and support after a gap up later in the month. Earlier this month, the same level held the stock at the open when it gapped lower. The 50-day moving average is also in play, and it is starting to look like the stock has regained it. The overall trend in Visa is impressive and pull backs throughout the rally this year have been shallow. Another sign of strength is how stable the stock was in the past week while the markets were generally volatile and under pressure.

V Chart August 2019 verticle options spread

V Chart August 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, at least a little bit.

Buy To Open V 20SEP19 175 Puts (V190920P175)
Sell To Open V 20SEP19 180 Puts (V190920P180) for a credit of $2.06 (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 $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $203.50 and your broker would charge a $500 maintenance fee, making your investment $296.50 ($500 – $203.50).  If V closes at any price above $180 on September 20, both options would expire worthless, and your return on the spread would be 69% (787% annualized).

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

IBD Underlying Updates August 15, 2019

IBD Underlying Updates August 15, 2019

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

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

Happy trading,

Terry

Ulta Beauty (ULTA) Looks Poised to Break to Fresh Record Highs

Monday, August 12th, 2019

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

Terry

Ulta Beauty (ULTA) Looks Poised to Break to Fresh Record Highs

Several analysts are optimistic regarding Ulta Beauty’s stock price following their recent earnings surprise, here are two of them –  Why the Earnings Surprise Streak Could Continue for Ulta (ULTA) and How one retailer is beating the odds.

From a technical standpoint, ULTA has held above prior support near $330 and bounced higher. In the advance from the level, it has retaken both the 50 and 100-day moving averages. What’s most impressive about ULTA is the longer-run trend as the stock is up more than 40% YTD already. Considering the strong trend, and lack of bearish evidence, the path seems to be to the upside for ULTA with an aim of breaking to new record highs above $370.

ULTA Chart August 2019 Verticle Spread

ULTA Chart August 2019

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

Buy To Open ULTA 13Sep19 342.5 Puts (ULTA190913P342.5)
Sell To Open ULTA 13Aug19 345 Puts (ULTA190913P345) for a credit of $1.13 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when ULTA was trading near $347.  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 $110.50 and your broker would charge a $250 maintenance fee, making your investment $139.50 ($250 – $110.50).  If ULTA closes at any price above $345 on August 13, both options would expire worthless, and your return on the spread would be 79% (901% annualized).

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

IBD Underlying Updates August 8, 2019 Trade Ideas

IBD Underlying Updates August 8, 2019

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

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

Happy trading,

Terry

Consider Essent Group (ESNT) Following Their Earnings Report

Monday, August 5th, 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 Essent Group (ESNT) Following Their Earnings Report

ESNT reported earnings in the past week and despite an early day dip, the stock managed to close higher on the day. The following article provides a view on why the stock could continue higher – 2 Stocks Poised to Thrive in Volatile Times: Essent Group Ltd., Cognex Corporation. Also take a look at this article which discusses the earnings report and the declaration of a new dividend – Essent Group Ltd. Reports Second Quarter 2019 Results & Declares Inaugural Dividend.

There are two significant things going for ESNT from a technical perspective. First, the stock dipped below major support at $45.38 on Friday but managed to close above it. This has resulted in a hammer candle which is a popular candlestick that signals the potential for a reversal. This pattern is not just seen on a daily chart, it is also present on a weekly chart and even on a 4-hour chart. The horizontal level is considered significant as it triggered a major turn last year and as it has acted as support in recent months. The fact that the candlestick pattern printed above such a significant level strengthens it. The other thing going for the stock is that it managed to close higher despite an overall heavy tone in the markets on Friday. This divergence is quite important as the markets look a bit heavy following the price action in the past week.

ESNT Chart August 2019 verticle options spread

ESNT Chart August 2019

If you agree there’s further upside ahead for ESNT, 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 ESNT 20SEP19 40 Puts (ESNT190920P40)
Sell To Open ESNT 20SEP19 45 Puts (ESNT190920P45) for a credit of $1.68 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when ESNT was trading near $46.  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 $165.50 and your broker would charge a $500 maintenance fee, making your investment $334.50 ($500 – $165.50).  If ESNT closes at any price above $45 on September 20, both options would expire worthless, and your return on the spread would be 49% (389% annualized).

IBD Underlying Updates August 1, 2019 via Terry's Tips

IBD Underlying Updates August 1, 2019

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

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

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

Happy trading,

Terry

PayPal (PYPL) Dips Following Earnings, What’s Next?

Monday, July 29th, 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 Following Earnings, What’s Next?

PayPal slipped lower after reporting earnings in the past week. Take a look at what these analysts are saying about the stock post-earnings – PayPal Q2 Earnings Beat Estimates, Revenues Up Y/Y and PayPal’s Earnings May Have Disappointed but Its Chart is “BTF”.

Paypal dipped to the 50-day moving average on Thursday and held above the moving average on Friday. The stock trades at a confluence of support as there is also a horizontal level in play. The level comes in at $113.70 and acted as both resistance and support in the past. In the event the stock falls to hold here, there is further support from the 100-day moving average close to around $112.

PYPL Chart July 2019 vertical options spread after earnings announcement

PYPL Chart July 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, or at least not decline very much.

Buy To Open PYPL 30AUG19 112 Puts (PYPL190830P112)
Sell To Open PYPL 30AUG19 115 Puts (PYPL190830P115) for a credit of $1.45 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when PYPL was trading near $115.  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 $142.50 and your broker would charge a $300 maintenance fee, making your investment $157.50 ($300 – $142.50).  If PYPL closes at any price above $115 on August 30, both options would expire worthless, and your return on the spread would be 90% (1027% annualized).

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

IBD Underlying Updates July 25, 2019 weekly trade ideas

IBD Underlying Updates July 25, 2019

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

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

Happy trading,

Terry

Can The Trade Desk (TTD) Continue the Upward Momentum Into Earnings?

Monday, July 22nd, 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 The Trade Desk (TTD) Continue the Upward Momentum Into Earnings?

TTD has had a spectacular gain in the first half of the year, check out this article which outlines four reasons why it could continue higher – Is The Trade Desk a Buy?. Also take a look at this article published by Zack’s – The Trade Desk Outpaces Stock Market Gains: What You Should Know.

From a technical perspective, TTD is testing a horizontal level that had acted as resistance in May. Just below it, there is some further support from the 50-day moving average. So far, the decline from the top in early June has not had a lot of momentum behind it. This combined with the hold above the mentioned moving average signals that the broader trend remains firmly to the upside.

TTD Chart July 2019 verticle stock options spread

TTD Chart July 2019

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

Buy To Open TTD 09AUG19 230 Puts (TTD190809P230)
Sell To Open TTD 09AUG19 235 Puts (TTD190809P235) for a credit of $2.48 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when TTD was trading near $235.  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 $245.50 and your broker would charge a $500 maintenance fee, making your investment $254.50 ($500 – $245.50).  If TTD closes at any price above $235 on August 9, both options would expire worthless, and your return on the spread would be 96% (1947% annualized).

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

IBD Underlying Updates July 18, 2019 Terry's Tips

IBD Underlying Updates July 18, 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

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