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Posts Tagged ‘Bullish Options strategies’

Netflix (NFLX) Shows Renewed Upward Momentum

Monday, January 27th, 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.

Netflix, a recent addition to the IBD Top 50 list, has shown strong bullish momentum despite a brief dip following its recent earnings report. The following article highlights some of the positive takeaways from the earnings report – 6 Critical Takeaways Learned From Netflix’s Q4 Earnings Report. Also, take a look at this recent CNBC article which includes details of a price target upgrade and a video interview with Mark Cuban – Netflix stock climbed more than 7%, its best day of trading for the year.

Technicals

The strongest signal from NFLX comes from a bullish breach above $336 which was an important price point in 2019. But more important is the manner in which the stock did so. There was an initial dip lower following the earnings report, which might have spooked investors, that followed with a momentum-driven rally. This type of price action often occurs when the market participants are searching for liquidity to establish large bullish positions. It holds especially true during earnings releases as trading volumes tend to be elevated. Further, the stock once again trades comfortably above its 100-week moving average which has been an important indicator in the past. The next major level of interest to the upside is $374 while $336 is expected to support any near-term dips.

NFLX Chart January 2020

NFLX Chart January 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 28FEB20 350 Puts (NFLX200228P350)
Sell To Open NFLX 28FEB20 352.5 Puts (NFLX200228P352.5) for a credit of $1.13 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when NFLX was trading near $353.  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 $250 maintenance fee, making your investment $138.30 ($250 – $111.70).  If NFLX closes at any price above $352.50 on February 28, both options would expire worthless, and your return on the spread would be 81% (924% annualized).

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

IBD Underlying Updates January 25, 2020

IBD Underlying Updates January 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

L3 Harris Technologies (LHX) Breaks to Record Highs, What’s Next?

Monday, January 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.

LHX has received positive media coverage as of late. The IBD recently wrote an article naming the company its stock of the day and it has since rallied to trigger IBD’s buy point. Meanwhile, Zack’s has included the stock as part of their list of 4 defense stocks they think will do really well in 2020.

Technicals

Two notable technical developments are seen in the daily chart for L3 Harris Technologies. First, the stock has broken higher from a bullish flag pattern that had encompassed prices from September until late January. The second technical development that offers a bullish signal is the break above $215 resistance. This level is considered significant as it held the stock lower on multiple attempts in August and September. Further, the stock trades at an all-time high after breaking above the horizontal level.

LHX Chart January 2020 vertical options spread

LHX Chart January 2020

If you agree there’s further upside ahead for LHX, 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 LHX 21FEB20 210 Puts (LHX200221P210)
Sell To Open LHX 21FEB20 220 Puts (LHX200221P220) for a credit of $3.78 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when LHX was trading near $220.  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 $376.70 and your broker would charge a $1000 maintenance fee, making your investment $623.30 ($1000 – $376.70).  If LHX closes at any price above $220 on February 21, both options would expire worthless, and your return on the spread would be 60% (684% annualized).

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

IBD Underlying Updates January 18, 2020

IBD Underlying Updates January 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

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

Consider Alibaba (BABA) Following the Technical Break

Monday, November 18th, 2019

Consider Alibaba (BABA) Following the Technical Break

With the stock markets gaining upward momentum Alibaba is gaining attention. The following two analysts have included the stock in their top picks of stocks to own – These 3 ‘Strong Buy’ Giants Still Have Room for Growth, Say Analysts and 5 Mega Cap Stocks Hedge Funds Are Crazy About.

From a technical standpoint, BABA has scaled above a fairly important resistance level at $181. This is a level that held the stock lower since July and the upward break suggests the stock has resumed within its uptrend. Further, the stock has also regained its 20-day moving average and has been trading in a bullish trendline channel which originates from a low printed in early October. There has been a strong show of buying on a retest of the horizontal level in the past week which is also a bullish sign.

BABA Chart November 2019 vertical options spread

BABA Chart November 2019

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 20DEC19 180 Puts (BABA191220P180)
Sell To Open BABA 20DEC19 185 Puts (BABA191220P185) for a credit of $2 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when BABA was trading near $185.  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 $198.70 and your broker would charge a $500 maintenance fee, making your investment $301.30 ($500 – $198.70).  If BABA closes at any price above $185 on December 20, both options would expire worthless, and your return on the spread would be 66% (753% annualized).

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

IBD Underlying Updates November 16, 2019 via Terry's Tips

IBD Underlying Updates November 16, 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

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

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