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Posts Tagged ‘Bullish Options strategies’

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

Emergent (EBS) Rallies as CEO Discusses Plans of Coronavirus Vaccine Development

Monday, March 16th, 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.

A few biotech companies are rallying as investors are encouraged by the prospect of a Coronavirus vaccine, and EBS is one of them. The following two articles discuss the matter in detail –  Emergent (EBS) Begins Development of Treatments for COVID-19 and Emergent BioSolutions CEO Talks Coronavirus Vaccine Development.

Technicals

EBS is an outperformer and posted its highest weekly close since 2018 in the past week. In the process, the stock has overtaken a major horizontal resistance level at $66 that proved to be a hurdle on a few attempts between 2019 and 2020. On a weekly chart, the stock has posted a strong upside candle that erases several weeks of declines which can be seen as a bullish signal. Further, the stock is in a clear uptrend since bottoming out in late August and the recent upward momentum suggests the bullish trend remains intact.

EBS Chart March 2020 Covid-19 response

EBS Chart March 2020

If you agree there’s further upside ahead for EBS, 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 EBS 17APR20 65 Puts (EBS200417P65)
Sell To Open EBS 17APR20 70 Puts (EBS200417P70) for a credit of $1.78 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when EBS was trading near $69.  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 EBS closes at any price above $70 on April 17, 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 March 14, 2020

IBD Underlying Updates March 14, 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

Regeneron Pharmaceuticals (REGN) Rallies to Two and a Half Year High

Monday, March 9th, 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.

While many companies have seen a sharp drop in their stock price as a result of the Coronavirus, REGN has broken to levels not seen since September 2017. Take a look at the following two articles for details – Regeneron (REGN) Gains from Focus on Coronavirus Treatments and Why Regeneron Shares Rose 31.6% in February.

Technicals

The weekly chart below shows REGN breaking higher from a downward trend channel that has contained price action for nearly five years. This type of upward break usually signals a bullish continuation. On a daily chart, the stock also shows strong upward momentum and technical signs of breaking out. The main appeal to this stock is that it is notably outperforming in a period where the markets have generally been under pressure. Further, the stock is benefiting from the same driver that is otherwise creating downward pressure in the broader equity markets.

REGN Chart March 2020: Coronavirus testing

REGN Chart March 2020

If you agree there’s further upside ahead for REGN, 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 REGN 09APR20 490 Puts (REGN200409P490)
Sell To Open REGN 09APR20 492.5 Puts (REGN200409P492.5) for a credit of $1.18 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when REGN was trading near $494.  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 REGN closes at any price above $492.5 on April 09, 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 March 7, 2020

IBD Underlying Updates March 7, 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

Buy the Dip in Microsoft (MSFT)

Monday, February 24th, 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.

Microsoft’s stock price dipped in the past week and these two following articles point out several reasons why investors might want to take advantage of the dip – Microsoft (MSFT): Strong Industry, Solid Earnings Estimate Revisions, and 3 Reasons Microsoft Has More Growth Ahead of It.

Technicals

While MSFT corrected lower last week, downward momentum is lacking when compared to prior weeks. The stock is currently testing the 20-day moving average which is an indicator MSFT has not traded below on a sustained basis in at least six months. Further support is seen at $174 which is a horizontal level near that acted as resistance last month. The strongest appeal to this stock is that the upward momentum has been increasing since it broke out in late October, and this upward momentum has not been negated by the recent dip. It would take a sustained drop below $174 to alter the near-term outlook for MSFT.

MSFT Chart February 2020 buy in dip

MSFT Chart February 2020

If you agree there’s further upside ahead for MSFT, 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 MSFT 27MAR20 175 Puts (MSFT200327P175)
Sell To Open MSFT 27MAR20 177.5 Puts (MSFT200327P177.5) for a credit of $0.98 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when MSFT was trading near $179.  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 $96.70 and your broker would charge a $250 maintenance fee, making your investment $153.30 ($250 – $96.70).  If MSFT closes at any price above $177.5 on March 27, both options would expire worthless, and your return on the spread would be 63% (719% annualized).

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

IBD Underlying Updates February 22, 2020

IBD Underlying Updates February 22, 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

Alibaba (BABA) – a Stock to Buy Following Earnings

Monday, February 17th, 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.

Alibaba’s earnings came in ahead of expectations and, as per MarketWatch, three analysts have revised up their price targets since. Take a look at the following article which discusses how the Coronavirus might alter consumer behavior to Alibaba’s benefit –  Alibaba’s Looking For Black Swan Opportunities, and also check out this article published by Zack’s which breaks down the earnings report – Alibaba (BABA) Surpasses Q3 Earnings & Revenue Estimates.

Technicals

Earlier this year, BABA scaled above the 2018 high of $212 to trade at a fresh record high. There was a correction since, however, the price action over the past few weeks shows the stock regaining some momentum and holding above the prior high which is now viewed as support. Further, the 50-day moving average comes into play and held the stock higher on a dip earlier this month. A rally above recent highs at $226 can offer confirmation of a bullish continuation while it would take a sustained drop below $212 to alter the near-term bullish view.

BABA Chart February 2020 vertical options spread

BABA Chart February 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 a little.

Buy To Open BABA 20MAR20 215 Puts (BABA200320P215)
Sell To Open BABA 20MAR20 220 Puts (BABA200320P220) for a credit of $2.20 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when BABA 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 $218.70 and your broker would charge a $500 maintenance fee, making your investment $281.30 ($500 – $218.70).  If BABA closes at any price above $220 on March 20, both options would expire worthless, and your return on the spread would be 78% (890% annualized).

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

IBD Underlying Updates February 15, 2020

IBD Underlying Updates February 15, 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

ServiceNow (NOW) Stock Breaks Out On Earnings Beat

Monday, February 3rd, 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.

ServiceNow stock advanced sharply higher in the past week after earnings came in better than expected. Here is what two analysts have to say about the recent earnings report – Service Now’s (NOW) Q4 Earnings Beat, Revenues Rise Y/Y and ServiceNow (NYSE:NOW) PT Raised to at Jefferies Financial Group.

Technicals

The earnings report in the past week has triggered a technical breakout in NOW which trades at all-time highs. The technical charts suggest the upward momentum will continue while the stock holds above the breakout point at $319. The upper bound of a rising trend channel is within proximity and this might trigger a near-term consolidation while an upward break of it would be indicative of rising upward momentum.

NOW Chart February 2020 upward momentum

NOW Chart February 2020

If you agree there’s further upside ahead for NOW, 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 NOW 13MAR20 330 Puts (NOW200213P330)
Sell To Open NOW 13MAR20 335 Puts (NOW200213P335) for a credit of $1.89 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when NOW was trading near $338.  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 $187.70 and your broker would charge a $500 maintenance fee, making your investment $312.30 ($500 – $187.70).  If NOW closes at any price above $335 on March 13, both options would expire worthless, and your return on the spread would be 60% (562% annualized).

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

IBD Underlying Updates February 2, 2020

IBD Underlying Updates February 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

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

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