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Archive for the ‘Weekly Options’ Category

The Trade Desk (TTD) Has the Potential to Break to an All-Time High

Monday, May 25th, 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.

Several stocks have already broken to all-time highs and TTD looks poised to join this group. Check out the following two articles that both suggest that while TTD might be a bit expensive, it is a top pick among investors – The Trade Desk: Capturing A Revolutionary Trend and Investing in These 3 Top Stocks Could Double Your Money.

Technicals

TTD has shown strong upward momentum since the start of April. Dips have been shallow as buyers are quick to step in. Resistance near $324 has triggered a bit of pullback over the past few weeks which is to be expected considering it marks the previous all-time high. But the general lack of selling pressure from $324 is a sign of strength. Combined with the strong upward momentum as of late, a strong case can be made that the stock is headed to all-time highs. Technical support for the stock is seen at $280 which is considered significant as it acted as a major barrier over the summer last year.

TTD Chart May 2020 - Stock All Time High

TTD Chart May 2020

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 five weeks, or at least not decline very much.

Buy To Open TTD 26JUN20 305 Puts (TTD200626P305)
Sell To Open TTD 26JUN20 307.5 Puts (TTD200626P307.5) for a credit of $1.18 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when TTD was trading near $308.  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 $250 maintenance fee, making your investment $133.30 ($250 – $116.70).  If TTD closes at any price above $307.5 on June 26, both options would expire worthless, and your return on the spread would be 88% (1004% annualized).

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

IBD Underlying Updates May 23, 2020

IBD Underlying Updates May 23, 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

American Tower (AMT) Looks Attractive as Investors Once Again Focus on 5G

Monday, May 18th, 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.

5G was a hot topic among investors ahead of the Coronavirus escalation. Now that the markets are picking up momentum again, companies that stand to gain from this technology are in the spotlight. Take a look at the following article which discusses how AMT stands to gain – 5G Is Still Coming Despite Covid-19. These Are the Stocks Set to Benefit First. Also, have a look at this article – 5G Will Be a Game-Changer for American Tower. It mentions that the stock may see some near-term weakness and that investors should take advantage of that. Interestingly, the stock has shown exactly that as it has pulled back from recent highs since the article was written.

Technicals

Two things stand out in the recent price action for AMT. First, it was able to rally to fresh record highs in April. Although it was brief, it shows strength and provides some confirmation that the uptrend remains intact. The second appeal is that the stock is currently testing its 200-day moving average. This particular indicator was well-respected in late 2019 and managed to hold the stock higher on several tests. It’s one of the more commonly watched moving averages and technical traders will be well aware of its presence.

AMT Chart May 2020: 5G stock resurgance despite COVID

AMT Chart May 2020

If you agree there’s further upside ahead for AMT, 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 AMT 19JUN20 220 Puts (AMT200619P220)
Sell To Open AMT 19JUN20 230 Puts (AMT200619P230) for a credit of $3.48 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when AMT was trading near $230.  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 $346.70 and your broker would charge a $1000 maintenance fee, making your investment $653.30 ($1000 – $346.70).  If AMT closes at any price above $230 on June 19, 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 May 16, 2020

IBD Underlying Updates May 16, 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

Solar Edge (SEDG) is Well Positioned to Break to a Record High

Monday, May 11th, 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.

Solar Edge is up 75% from its lows in March and several analysts think the stock can continue higher. Check out the following articles which discuss the appeal – 5 Under-the-Radar Energy Stocks to Buy Now and Why Shares of SolarEdge Technologies Popped 43.3% in April.

Technicals

SEDG is showing strong upward momentum over the last month. There was a dip in the past week following earnings but the stock has recovered a bulk of the loss which is often a sign of strength. Since climbing above the 20-day moving average, buyers have been quick to step in on dips well ahead of the moving average. A horizontal level at $111 was a major hurdle early in the year and the weekly close above it further builds towards a bullish case.

SEDG Chart May 2020 options ideas

SEDG Chart May 2020

If you agree there’s further upside ahead for SEDG, 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 SEDG 19JUN20 110 Puts (SEDG200619P110)
Sell To Open SEDG 19JUN20 115 Puts (SEDG200619P115) for a credit of $1.58 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when SEDG 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 $1.30 per spread.  Each contract would then yield $156.70 and your broker would charge a $500 maintenance fee, making your investment $343.30 ($500 – $156.70).  If SEDG closes at any price above $115 on June 19, both options would expire worthless, and your return on the spread would be 46% (431% annualized).

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

IBD Underlying Updates May 9, 2020

IBD Underlying Updates May 9, 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

The Post-Earnings Dip in Netflix (NFLX) Offers a Buy Opportunity

Monday, May 4th, 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.

Several analysts have become increasingly bullish on Netflix after their most recent earnings report, here are two of them – 3 Reasons Why Netflix (NFLX) Is a Great Growth Stock and Netflix: A High-Growth Utility Despite Its High Valuation.

Technicals

Netflix is one of the few well-known companies that has broken to fresh record highs after the Coronavirus inspired drop in March. In the process of doing so, the stock has broken above an important price level at $385 that was a hurdle on three distinct attempts between late 2018 and March of this year. This technical breakout could lead to notable gains for the stock making the current pullback a buying opportunity. Buyers have already shown signs of stepping in at the 20-day moving average, further support comes at the breakout point of $385.

NFLX Chart May 2020 Record highs

NFLX Chart May 2020

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 five weeks, or at least not decline very much.

Buy To Open NFLX 12JUN20 410 Puts (NFLX200612P410)
Sell To Open NFLX 12JUN20 415 Puts (NFLX200612P415) for a credit of $2.40 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when NFLX was trading near $415.  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 $238.70 and your broker would charge a $500 maintenance fee, making your investment $261.30 ($500 – $238.70).  If NFLX closes at any price above $415 on June 12, both options would expire worthless, and your return on the spread would be 91% (1038% annualized).

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

IBD Underlying Updates May 2, 2020

IBD Underlying Updates May 2, 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

Barrick Gold (GOLD) Poised to Advance After Breaking to a Seven-Year High

Monday, April 27th, 2020

I invite you to check out our Track Record during this difficult economic time.  In the first quarter of this year the market fell by 23%.  The actual options portfolios carried out at Terry’s Tips increased by 46% during this quarter.  Quite a difference, something that we are quite proud of.   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.

Several analysts believe Barrick Gold is a good investment, here are two of them – Barrick Gold (GOLD) Moves to Strong Buy: Rationale Behind the Upgrade and What Makes Barrick (GOLD) an Attractive Investment Option.

Technicals

Barrick Gold recently broke to a seven-year high after crossing above the 2016 high near $23. Similar breakouts are seen in related instruments such as the gold miners ETF (GDX). Further, GOLD is up more than 100% since the bottom in late March. The bottom correlates well with the S&P 500 yet the index has gained roughly 30% since then, in comparison. Precious metals and related stocks typically gain when equities are under pressure and the out performance during a bullish rally in stocks speaks to the strength and demand for precious metals at this time. Lastly, GOLD was added to the IBD Top 50 list this past week along with Kirkland Gold (KL), and Franco Nevada (FNV) was added last week. The sudden addition of these three stocks adds to the bullish case for this sector.

GOLD Chart April 2020

GOLD Chart April 2020

If you agree there’s further upside ahead for GOLD, 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 GOLD 05JUN20 24 Puts (GOLD200605P24)
Sell To Open GOLD 05JUN20 27 Puts (GOLD200605P27) for a credit of $1.70 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when GOLD was trading near $27.  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 $168.70 and your broker would charge a $300 maintenance fee, making your investment $131.30 ($300 – $168.70).  If GOLD closes at any price above $27 on June 05, both options would expire worthless, and your return on the spread would be 128% (1198% annualized).

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

IBD Underlying Updates April 25, 2020

IBD Underlying Updates April 25, 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

Cloud-Based Software Company Veeva Systems (VEEV) Breaks to a Record High

Monday, April 20th, 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.

Veeva Systems is among a small group of stocks that broke to an all-time high in the past week. The Investor’s Business Daily recently wrote an article explaining why the stock stands out – IBD 50 Growth Stocks To Watch: Veeva’s Virtual Role In The Coronavirus Fight. Also have a look at the following article which discusses the company’s strong financials and prospects for growth – Is Now The Time To Put Veeva Systems (NYSE:VEEV) On Your Watchlist?

Technicals

VEEV Chart April 2020

VEEV Chart April 2020

The main appeal to VEEV is that it is a clear outperformer. The stock broke above $177 in the past week which signals that the uptrend has resumed after a correction that started in July last year and lasted until about a month ago. The stock is a bit oversold over the near-term and this could result in a consolidation. However, the bullish break stands to keep the stock well bid on dips with the first level of support at last year’s high of $177.

If you agree there’s further upside ahead for VEEV, 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 VEEV 15MAY20 175 Puts (VEEV200515P175)
Sell To Open VEEV 15MAY20 180 Puts (VEEV200515P180) for a credit of $2.18 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when VEEV was trading near $181.  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 VEEV closes at any price above $180 on May 15, both options would expire worthless, and your return on the spread would be 76% (1110% annualized).

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

IBD Underlying Updates April 18, 2020

IBD Underlying Updates April 18, 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

Has Adobe (ADBE) Reverted to a Bullish Trend?

Monday, April 13th, 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.

With the markets gaining upward momentum, several analysts have had good things to say about Adobe. Here is what the IBD thinks about the stock – Is Adobe Stock A Buy Right Now? Here’s What Earnings, ADBE Chart Show. Also take a look at the following article which makes a case that the company is in a good position to handle the impact of the Coronavirus – Adobe: A Resilient Software Giant

Technicals

The main technical development for ADBE as of late is that it has comfortably regained its 200-day moving average. This particular indicator has drawn buyers in the past and dips below it have generally been short-lived in the recent past. The stock appears to be building a base for its next move higher. Further, the monthly candle for March signals that there was strong buying after the dip below $300. Over the near-term, the $327 price point has proven to be a small hurdle. A break above can lead to a rally towards $360 which is a significant technical area for the stock.

ADBE Chart April 2020 bullish trend

ADBE Chart April 2020

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 a little bit.

Buy To Open ADBE 15MAY20 315 Puts (ADBE200515P315)
Sell To Open ADBE 15MAY20 320 Puts (ADBE200515P320) for a credit of $1.60 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when ADBE was trading near $319.  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 $158.70 and your broker would charge a $500 maintenance fee, making your investment $341.30 ($500 – $158.70).  If ADBE closes at any price above $320 on May 15, both options would expire worthless, and your return on the spread would be 46% (525% annualized).

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

IBD Underlying Updates April 11, 2020

IBD Underlying Updates April 11, 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

Should you Buy the Dip in Zoom Video Communications (ZM)?

Monday, April 6th, 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’s stock price corrected lower in the past week on privacy and other concerns. The question at this point is whether investors will see value after a more than 20% drop from the high. The following article discusses the concerns investors are faced with and how the company CEO is addressing them –  Zoom says it topped 200 million daily participants in March as CEO addresses privacy concerns. Also take a look at this article which highlights why ZM is an attractive stock, particularly at this time – 4 Tech Stocks Boosted by Remote Schooling Sessions.

Technicals

A confluence of support held ZM higher in the past week. It consists of a horizontal level at $120, which was prior resistance in late February and early March, and a rising trendline that dates back to late January. While above this area, the stock has the potential to extend higher, at least towards the next level of interest which falls at $135.

ZM Chart April 2020 dip from COVID-19 overload

ZM Chart April 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 08MAY20 120 Puts (ZM200508P120)
Sell To Open ZM 08MAY20 125 Puts (ZM200508P125) for a credit of $2.68 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when ZM was trading near $128.  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 $266.70 and your broker would charge a $500 maintenance fee, making your investment $233.30 ($500 – $266.70).  If ZM closes at any price above $125 on May 08, both options would expire worthless, and your return on the spread would be 114% (1300% annualized).

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

IBD Underlying Updates April 4, 2020

IBD Underlying Updates April 4, 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

Has Alibaba (BABA) Reversed Into a Bullish Trend?

Monday, March 30th, 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.

With the markets bouncing higher, news outlets have started publishing articles on where big investors are putting their money. Have a look at what these two articles have to say about Alibaba – Bullish investors pour money into Alibaba, Amazon, Intel and Microsoft and 5 Stocks Top Earners Steven Cohen and David Tepper Agree On.

Technicals

BABA has bounced higher from an important technical support confluence that consists of a rising trendline and a horizontal level. The trendline originates from a low posted at the end of 2018 and the while the stock holds above it, the broader bullish looks to still be intact. Since turning from this support confluence, BABA has regained it’s 200-day moving average which is encouraging for bulls. Buyers should defend dips towards the trendline to maintain the upward momentum. A possible near-term target is found at $211 which has previously acted as both support and resistance.

BABA Chart March 2020 bullish trend

BABA Chart March 2020

If you agree there’s further upside ahead for BABA, 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 BABA 08MAY20 185 Puts (BABA200508P185)
Sell To Open BABA 08MAY20 187.5 Puts (BABA200508P187.5) for a credit of $1.03 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when BABA 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 $101.70 and your broker would charge a $250 maintenance fee, making your investment $148.30 ($250 – $101.70).  If BABA closes at any price above $187.5 on May 08, 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 March 28, 2020

IBD Underlying Updates March 28, 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

Domino’s Pizza (DPZ) is on a Hiring Spree to Meet a Pickup in Demand

Monday, March 23rd, 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.

Amidst all the Coronavirus chaos, Domino’s Pizza is busy searching for new workers to meet a recent increase in demand. Check out the following two articles for more details – Domino’s expects to hire 10,000 workers and Why Domino’s, Wendy’s, and Papa John’s Are Absolutely Soaring Thursday.

Technicals

DPZ recently broke above a horizontal level at $299 which is considered to be significant as the same level served the hold the stock lower on several attempts since the summer last year. The initial break higher followed its earnings report last month. The stock has pulled back since then and is currently being held higher by the same price point as well as the 200-day moving average. From a technical point of view, this is an area where the stock can reverse back into an uptrend after pulling back over the last month.

DPZ Chart March 2020 hiring among COVD-19 outbreak

DPZ Chart March 2020

If you agree there’s further upside ahead for DPZ, 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 DPZ 24APR20 295 Puts (DPZ200424P295)
Sell To Open DPZ 24APR20 300 Puts (DPZ200424P300) for a credit of $2.23 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when DPZ was trading near $300.  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 $221.70 and your broker would charge a $500 maintenance fee, making your investment $278.30 ($500 – $221.70).  If DPZ closes at any price above $300 on April 24, both options would expire worthless, and your return on the spread would be 80% (913% annualized).

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

IBD Underlying Updates March 21, 2020

IBD Underlying Updates March 21, 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

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Success Stories

I have been trading the equity markets with many different strategies for over 40 years. Terry Allen's strategies have been the most consistent money makers for me. I used them during the 2008 melt-down, to earn over 50% annualized return, while all my neighbors were crying about their losses.

~ John Collins