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Posts Tagged ‘FIVE’

Consider Five Below Inc (FIVE) After The Bullish Technical Breakout

Monday, October 16th, 2017

This week we are featuring another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our portfolios to identify outperforming stocks and place spreads that take advantage of the momentum.

The composite average gain for the 10 portfolios carried out for Terry’s Tips  paying subscribers has now reached 95.2% for 2017.  Isn’t it time for you to come on board and learn exactly how our options strategies have been able to compile this kind of record so consistently this year?

Terry

Consider Five Below Inc (FIVE) After The Bullish Technical Breakout

Several analysts have been praising Five Below Inc’s business model and see further upside in the stock price.  Here are two of them – Five Below Might Offer 15% Upside Potential and Amazon Who? This Fast-Growing, Teen-Focused Retailer Breaks Out.

Recently, there has been a technical breakout in FIVE as it has scaled above the 2016 and 2017 highs which were in close proximity of each other around the $53 price point.  The stock has also climbed above a horizontal level at $54.77 which was major resistance in 2013, in doing so, the stock briefly traded at record levels.  There has been a retracement in the past week which could be offering an attractive entry point.

 

FIVE Chart October 2017

FIVE Chart October 2017

*source Tradingview.com

If you agree there’s further upside ahead for FIVE, consider this trade which is a bet that the stock will continue to advance, or at least not decline very much over the next four weeks.

Buy To Open FIVE 17Nov17 50 Puts (FIVE171117P50)
Sell To Open FIVE 17Nov17 55 Puts (FIVE171117P55) for a credit of $1.28 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when FIVE was trading near $55.  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 $126 and your broker would charge a $500 maintenance fee, making your investment $374 ($500 – $126).  If FIVE closes at any price above $55 on November 17, 2017, both options would expire worthless, and your return on the spread would be 34% (384% annualized).

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

IBD Underlying Updates October 12, 2017

IBD Underlying Updates October 12, 2017

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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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