from the desk of Dr. Terry F Allen

Skip navigation

Member Login  |  Contact Us  |  Sign Up

support@terrystips.com

Intuit (INTU) Chart Signals Buying Opportunity

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.

INTU looks appealing from both a technical and fundamental perspective. The following two articles discuss why investors might be drawn to the stock from the fundamental side of things – Here is Why Growth Investors Should Buy Intuit (INTU) Now and Here’s Why I Think Intuit Is An Interesting Stock.

Technicals

On the technical side, INTU trades near an important confluence of support, and recent price action suggests that buyers are willing to defend it. Support for INTU comes from its 100-day moving average as well as a horizontal level at $305. This price point previously acted as resistance back in February when the markets broadly turned lower. Further, on the larger time frames, INTU tested its 20-week moving average in the past week. There was a strong rally from the indicator which has led to a bullish reversal candlestick formation on a weekly chart.

INTU Chart September 2020 - strong rally

INTU Chart September 2020

If you agree there’s further upside ahead for INTU, consider this trade which relies on the stock remaining above $317.50 through the expiration in five weeks.

Buy To Open INTU 30OCT20 315 Puts (INTU201030P315)
Sell To Open INTU 30OCT20 317.5 Puts (INTU201030P317.5) for a credit of $1.03 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when INTU was trading near $318.50.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $101.70. This reduces your buying power by $250 and makes your investment $148.30 ($250 – $101.70).  If INTU closes at any price above $317.50 on October 30, both options will expire worthless, and your return on the spread would be 69% ($101.70 / $148.30), or 787% annualized.

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

IBD Underlying Updates September 26, 2020

IBD Underlying Updates September 26, 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

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

Member Login  |   Programs and Pricing  |  Testimonials  |  About Us  |  Terms and Conditions  |  Accessibility Statement  |  Privacy Policy  |  Site Map

Options are not suitable for all investors as the special risks inherent to options trading my expose investors to potentially rapid and substantial losses. Please read Characteristics and Risks of Standardized Options before investing in options

© Copyright 2001-2022 Terry's Tips, Inc. dba Terry's Tips
235 Primrose Lane, Ferrisburgh, VT 05456