Posts Tagged ‘Calendar Spreads’
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
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
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
Tags: Auto-Trade, Bearish Options Strategies, Bull Put Credit Spread, Bullish Options strategies, Calendar Spreads, Calls, Credit Spreads, diagonal spreads, Earnings Option Strategy, implied volatility, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, SPY, Stocks vs. Stock Options, Terry's Tips, thinkorswim, TTD, Volatility, Weekly Options
Posted in 10K Strategies, Coffee Can Investing, Monthly Options, SPY, Stock Option Trading Idea Of The Week, Stock Options Strategies, Weekly Options | No Comments »
Monday, July 15th, 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) Nears Record Highs, Will it Break Upward?
After an impressive run in the first half of the year, several analysts still see the potential for further upside in ULTA. Take a look at what these analysts have to say – Ulta Beauty – Consensus Indicates Potential 4.2% Upside and Why Ulta Beauty Stock Gained 42% So Far in 2019.
ULTA is actually seen approaching a significant resistance level at $359. There are a few indicators that suggest that the stock will break higher from here. First, the stock posted a bullish engulfing candle in the past week. This momentum seems to suggest that ULTA is ready to continue rallying. Second, the stock held above an important support level in May that is found at $315. That level held the stock lower in 2017 and 2018. The strong presence of buyers and the steady bid from the level shows that the stock is well in demand. Lastly, when a stock lingers around a resistance level without a strong show of selling, it usually suggests an upward break. Especially when there is a strong trend in place as is the case for ULTA.
ULTA Chart July 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 16AUG19 350 Puts (ULTA190816P350)
Sell To Open ULTA 16AUG19 355 Puts (ULTA190816P355) for a credit of $2.03 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when ULTA was trading near $356. 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 $200.50 and your broker would charge a $500 maintenance fee, making your investment $299.50 ($500 – $200.50). If ULTA closes at any price above $355 on August 16, both options would expire worthless, and your return on the spread would be 67% (764% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates July 11, 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
Tags: Auto-Trade, Bearish Options Strategies, Bullish Options strategies, Calendar Spreads, Calls, Credit Spreads, diagonal spreads, Earnings Option Strategy, implied volatility, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, SPY, Stocks vs. Stock Options, Terry's Tips, thinkorswim, ULTA, Volatility, Weekly Options
Posted in 10K Strategies, Coffee Can Investing, Credit Spreads, Monthly Options, SPY, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Monday, July 8th, 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 Monster Beverage (MNST) Continue to Rally Into Earnings?
Zack’s recently published an article outlining reasons why they believe Monster Beverage is a good investment. Take a look at the article here – Here’s Why Monster Beverage is a Hot Investment Pick. Also, take a look at the following article which discusses the involvement of hedge funds in the stock – Did Hedge Funds Drop the Ball on Monster Beverage?
MNST is testing some resistance found at $66.25 but the recent price action appears to show strength. Indeed, the horizontal level has been holding sellers, but each decline from the level has become increasingly narrow which often is indicative of breakout potential. So far, the stock has tested the level three times. Triple tops are rare, especially in strong uptrends like the one MSNT has been experiencing as of late.
MNST Chart July 2019
If you agree there’s further upside ahead for MNST, 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 MNST 09AUG19 63 Puts (MNST190809P63)
Sell To Open MNST 09AUG19 66 Puts (MNST190809P66) for a credit of $1.12 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when MNST was trading near $66. 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 $109.50 and your broker would charge a $300 maintenance fee, making your investment $190.50 ($300 – $109.50). If MNST closes at any price above $66 on August 09, 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 July 4, 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
Tags: Auto-Trade, Bearish Options Strategies, Bullish Options strategies, Calendar Spreads, Calls, Credit Spreads, diagonal spreads, Earnings Option Strategy, implied volatility, MNST, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Weekly Options
Posted in 10K Strategies, Coffee Can Investing, Credit Spreads, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Weekly Options | No Comments »
Monday, July 1st, 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 Adobe (ADBE) Following Its Q2 Earnings Beat
Adobe soared to record highs after its recent earnings beat and several analysts expect that the momentum will continue. Here are two of them – 3 Stocks to Buy and Hold for Decades and Adobe Is a Buy Despite High Valuation.
Adobe has broken above two important horizontal levels in June. The first price point at $270 is derived from a monthly chart and marks resistance that held the stock lower in 2018. So far, the stock has managed to hold above it, on a monthly basis, for three months now. The second level falls at $286 and marks a horizontal level that has acted as both support and resistance. With the 20-day moving average converging towards the level, this is an area that is likely to hold some buyers.
ADBE Chart July 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, at least a little bit.
Buy To Open ADBE 2AUG19 292.5 Puts (ADBE19082P292.5)
Sell To Open ADBE 2AUG19 295 Puts (ADBE19082P295) for a credit of $1.10 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when ADBE was trading near $295. 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 $107.50 and your broker would charge a $250 maintenance fee, making your investment $142.50 ($250 – $107.50). If ADBE closes at any price above $295 on August 2, both options would expire worthless, and your return on the spread would be 75% (855% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates June 27, 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
Tags: ADBE, Auto-Trade, Bullish Options strategies, Calendar Spreads, Calls, Credit Spreads, diagonal spreads, Earnings Option Strategy, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Weekly Options
Posted in 10K Strategies, Credit Spreads, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Monday, June 17th, 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
The Trade Desk (TTD) Has Doubled in Value YTD
TTD has had an impressing rally in the year thus far, and these two analysts think it can continue the upward moment – Better Than an Ultra-Growth Stock? – The Trade Desk and The Trade Desk Could be the Investment of a Lifetime
The stock price just broke to record highs in the past week after breaking above a prior top set in early May. So far, the breakout point at $232.70 has held the upside. In the event the stock falls through, further support is at the 20-day moving average. What makes this stock so attractive is the upward momentum as well as it outperformance to the rest of the market. Looking at the gain for June alone, the stock is up just over 22% versus about a 5% gain for SPY.
TTD Chart June 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 five weeks, at least a little bit.
Buy To Open TTD 02AUG19 240 Puts (TTD190802P240)
Sell To Open TTD 02AUG19 245 Puts (TTD190802P245) for a credit of $2.28 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when TTD was trading near $245. 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 $225.50 and your broker would charge a $500 maintenance fee, making your investment $274.50 ($500 – $225.50). If TTD closes at any price above $245 on August 02, both options would expire worthless, and your return on the spread would be 82% (935% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates June 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
Tags: Auto-Trade, Bearish Options Strategies, Bull Put Credit Spread, Calendar Spreads, Credit Spreads, diagonal spreads, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, Terry's Tips, thinkorswim, TTD, Weekly Options
Posted in 10K Strategies, Credit Spreads, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Sunday, March 10th, 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
MGM Growth Properties (MGP) Dips Lower, Is It A Buy?
Several analysts think MGM Growth Properties has a lot more upside, here are two of them – A Careful Analysis of MGM Growth Properties and MGM Growth Properties On The Radar of Prospective Investors.
MGP is seen pulling back after testing resistance from a trendline drawn by connecting a high from late 2017 with the high from last year. Momentum indicators show no reason to believe a triple top is playing out and candlestick patterns on the higher time frames point to strength in recent upward momentum. The stock is currently testing its 200-day moving average which could be a spot where bulls might look to reenter.
MGP Chart March 2019
*source Tradingview.com
If you agree there’s further upside ahead for MGP, consider this trade which is a bet that the stock will continue to advance over the next six weeks, at least a little.
Buy To Open MGP 18APR19 25 Puts (MGP190418P25)
Sell To Open MGP 18APR19 30 Puts (MGP190418P30) for a credit of $1.18 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when MGP was trading near $30. 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 MGP closes at any price above $30 on April 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 March 7, 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
Tags: Auto-Trade, Bull Put Credit Spread, Bullish Options strategies, Calendar Spreads, Calls, Credit Spreads, MGP, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Volatility, Weekly Options
Posted in 10K Strategies, Credit Spreads, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Sunday, February 24th, 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. The actual Terry’s Tips portfolio that trades these ideas of the week has gained 148% in the first two months of 2019. Of course, past results are not always duplicated in the future, but we like our chances here.
Terry
Will Regeneron Pharmaceuticals Continue to Outperform Its Sector?
Regeneron Pharmaceuticals (REGN) has been a long-term performer, see what these two analysts have to say about the company moving forward – Why I Like Regeneron Pharmaceuticals, Inc. and Is Regeneron Pharmaceuticals Stock Outpacing Its Medical Peers This Year?
The main technical appeal to REGN is its ability to hold above a horizontal level near $410 that held the stock lower late last year. The level is now seen as strong support and recent price action seems to support that as a dip following their recent earnings report was bought up near the level. There is some confluence at the price point as the 50-Monthly moving average is slightly above it. The stock trades within a rising trend channel that originates from a low in May last year and the upper bound of the channel currently falls around $450-$460.
REGN Chart February 2019
*source Tradingview.com
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 29MAR19 417.5 Puts (REGN190329P417.5)
Sell To Open REGN 29MAR19 420 Puts (REGN190329P420) 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 $423. 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 $250 maintenance fee, making your investment $134.50 ($250 – $115.50). If REGN closes at any price above $420 on March 29, both options would expire worthless, and your return on the spread would be 86% (981% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates February 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
Tags: Auto-Trade, Bull Put Credit Spread, Bullish Options strategies, Calendar Spreads, Calls, Credit Spreads, diagonal spreads, Earnings Option Strategy, Monthly Options, Options Tutorial Program, Profit, profits, Puts, REGN, Risk, SPY, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Weekly Options
Posted in Uncategorized | No Comments »
Sunday, January 6th, 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 Five9 Inc (FIVN) Break Higher From It’s Range?
Take a look at what these analysts have to say about Five9 – IBD 50 Stocks To Watch: How Cloud, AI Shape Five9’s Software Future and Lookout for these Two stocks: American International Group, Five9 Inc.
Five9 has consolidated higher since hitting a low in late October and is seen trading within a range. The stock is an outperformer as most stocks posted losses in the last two months of the year. A technical pattern is emerging as a triangle can be drawn around the recent consolidation. To the upside, a break above $44.40 would suggest a bullish breakout. There is a confluence of downside support deriving from a rising trendline, the 50-day moving average, as well as a horizontal level. The horizontal level, which resides at $39.55, is considered well respected as it has acted both resistance and support on several occasions since the initial test in June.
*source Tradingview.com
If you agree there’s further upside ahead for FIVN, 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 FIVN 15FEB19 35 Puts (FIVN190215P35)
Sell To Open FIVN 15FEB19 40 Puts (FIVN190215P40) for a credit of $1.18 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when FIVN was trading near $43. 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 FIVN closes at any price above $40 on February 15, 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 January 3, 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
Tags: Auto-Trade, Bull Put Credit Spread, Bullish Options strategies, Calendar Spreads, Calls, Credit Spreads, FIVN, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, Straddles, Terry's Tips, thinkorswim, Volatility, Weekly Options
Posted in 10K Strategies, Credit Spreads, Earnings Announcement Options Strategy, Lazy Way Strategy, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Monday, May 14th, 2018
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 IPG Photonics (IPGP) Following the Technical Breakout
In addition to being listed as one of the IBD Top 50 companies, Investor’s Business Daily recently wrote about IPGP, outlining the reasons why the growth stock is setting up for another advance. Also take a look at this publication which discusses why IPGP is trending.
IPGP broke higher late last week from a bullish flag pattern that has been setting up for most of the year thus far. Technical traders tend to keep a close eye on flag patterns, especially in assets that have had a strong trend which IPGP certainly displayed in 2017. Technical support is found nearby from a horizontal level at $248 which marks last years high. Also near the level is additional support from the top of the broken flag pattern.
IPGP Chart May 2018 vertical spread
*source Tradingview.com
If you agree there’s further upside ahead for IPGP, 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 IPGP 15JUN18 240 Puts (IPGP180615P240)
Sell To Open IPGP 15JUN18 250 Puts (IPGP180615P250) for a credit of $3.58 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when IPGP was trading near $151. 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 $355.50 and your broker would charge a $1000 maintenance fee, making your investment $644.50 ($1000 – 355.50). If IPGP closes at any price above $250 on June 15, 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 May10, 2018
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
Tags: Auto-Trade, Bull Put Credit Spread, Bullish Options strategies, Calendar Spreads, Calls, Credit Spreads, IPGP, Monthly Options, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, TastyWorks, Terry's Tips, thinkorswim, Weekly Options
Posted in 10K Strategies, Credit Spreads, Earnings Announcement Options Strategy, Monthly Options, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Monday, February 19th, 2018
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. The actual portfolio we conduct at Terry’s Tips using these trades has gained 36% over the first six weeks of 2018 in spite of losing money on one of the spreads. The average of all our portfolios has gained 23.2% while the market (SPY) is up only 2.2%.
Terry
Is Floor & Decor (FND) stock offering an entry point?
Several analysts expect further upside for FND stock, one analyst has recently revised up price targets to $50 and this article discusses recent favorable coverage in the media.
FND is seen bouncing from a notable confluence of support near the $43 price point. The area contains a horizontal level at $42.43 that was previously major resistance that is not seen as support. Also, the lower line of a rising trend channel is found near the horizontal level. The combination offers strong downside support and price action so far has shown buyers to protect the area.
FND Chart February 2018
*source Tradingview.com
If you agree there’s further upside ahead for Floor & Decor, 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 FND 16Mar18 40 Puts (FND180316P40)
Sell To Open FND 16Mar18 45 Puts (FND180316P45) for a credit of $1.53 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when FND was trading near $45. Unless the stock rallies quickly from here, you should be able to get close to this amount.
If you use our favorite broker for this trade, tastyworks, your commission on this trade will only be $1 per opening contract ($2 per spread) (and there is no commission on closing trades, only the $.10 clearing fee). Each contract would then yield $1.51 and your broker would charge a $500 maintenance fee, making your investment $349 ($500 – $151). If FND closes at any price above $45.00 on March 16, both options would expire worthless, and your return on the spread would be 43% (632% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week
IBD Underlying Updates February 15, 2018
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.
As with all investments, you should only make option trades with money that you can truly afford to lose.
Happy trading,
Terry
Tags: Auto-Trade, autotrade, Bull Put Credit Spread, Bullish Options strategies, Calendar Spreads, Calls, Credit Spreads, diagonal spreads, FND, Monthly Options, portfolios, profits, Puts, Risk, TastyWorks, Terry's Tips, thinkorswim, Weekly Options
Posted in 10K Strategies, Credit Spreads, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
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