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Posts Tagged ‘Investors Business Daily’

Can Nvidia (NVDA) Continue Its Earnings-driven momentum?

Monday, May 28th, 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 real-life Terry’s Tips portfolio that trades these spreads has gained 97% so far in 2018, and has 4 spreads in place that will increase the gain to 123% in 3 weeks if the underlying stock prices hold their current prices or go up by any amount. And the year will not be half over by then.  Clearly, we have some happy campers who subscribe to our newsletter service, especially those who are having trades placed in their account through the Auto-Trade service offered by thinkorswim.

Terry

Can Nvidia (NVDA) Continue Its Earnings-driven momentum?

Several analysts have renewed their bullish NVDA outlook following their recent earnings report.  Here are two of them – Why Nvidia (NVDA) Is a Strong Buy and Nvidia Seen Soaring to Record on Explosive Growth.

NVDA pushed firmly higher following earnings earlier this month, gapping above a horizontal level at $239.  After briefly piercing to a record high, the stock has consolidated lower.  Buyers have stepped in slightly ahead of the horizontal level with the 20-day moving average providing additional support.  This area remains an important zone of support for NVDA.

NVDA Chart May 2018

NVDA Chart May 2018

*source Tradingview.com

If you agree there’s further upside ahead for NVDA, 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 NVDA 22JUN18 242.5 Puts (NVDA180622P242.5)
Sell To Open NVDA 22JUN18 245 Puts (NVDA180622P245) for a credit of $0.93 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when NVDA 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 $90.50 and your broker would charge a $250 maintenance fee, making your investment $159.50 ($250 – $90.50).  If NVDA closes at any price above $242.5 on June 22, both options would expire worthless, and your return on the spread would be 68% (834% annualized).

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

IBD Underlying Updates May 25, 2018

IBD Underlying Updates May 25, 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

Nvidia (NVDA) Is on the Verge of a Big Breakout

Sunday, March 18th, 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 Terry’s Tips portfolio that trades these spreads in an actual account for subscribers to follow on their own or have trades made for them in their account through the free Auto-Trade service offered by thinkorswim has gained 79% so far in 2018.

Terry

Nvidia (NVDA) Is on the Verge of a Big Breakout

Several analysts have an optimistic outlook towards NVDA despite the stock trading near some important resistance.  Here are two of them – Things Are Going Right for NVIDIA and AMD and Semiconductor Stocks Soar to Highest Level in Decades Despite Deal Woes.

NVDA tested resistance at the big psychological $250 price point in the past week for the third time this year.  However, with momentum indicators showing no signs of a top and as triple tops are generally rare, the probabilities suggest sellers will give up defending the resistance level.  Retracements from the level have also become increasingly narrow since the initial approach in early February which provides a technical indication that buyers are regaining control.  When a big level such as the one we are seeing in Nvidia now breaks, it often accompanies some sharp upside follow through.

NVDA Chart March 2018 on the rise

NVDA Chart March 2018

*source Tradingview.com

If you agree there’s further upside ahead for Nvidia, 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 NVDA 20APR18 245 Puts (NVDA180420P245)
Sell To Open NVDA 20APR18 250 Puts (NVDA180420P250) for a credit of $2.20 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when NVDA was trading near $250.  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 $218 and your broker would charge a $500 maintenance fee, making your investment $282 ($500 – $218).  If NVDA closes at any price above $250.00 on April 20, both options would expire worthless, and your return on the spread would be 77% (882% annualized).

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

IBD Underlying Updates March 15, 2018

IBD Underlying Updates March 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.  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

Is Alibaba (BABA) Ready to Accelerate Higher?

Wednesday, June 21st, 2017

This week we are featuring an option trading idea based on a stock on the IBD Top 50 List that just delivered robust earnings guidance.  We have added this spread to the Terry’s Tips  portfolio which trades vertical credit put spreads on selected IBD Top 50 companies (this portfolio has gained 77% so far in 2017).

Terry

Is Alibaba (BABA) Ready to Accelerate Higher?

Alibaba, broke out to fresh all-time highs last week following better than expected financial results both on the top and bottom line.  Prices have been forming a bull flag pattern which is a pause that refreshes higher.

If you concur with the views expressed by these analysts, consider making this trade which is a bet that BABA will continue to advance (or at least not decline very much) over the next five weeks:

What impressed investors even more than the company’s financial result, was the company’s forward guidance. The Chinese e-commerce giant estimates that revenue will increase almost 50% in the 2018 fiscal year. Analysts had previously estimated a revenue increase of about 35%. In the wake of this news, the average price target was raised to $160 with the highest at $190.

Technicals

After a round of profit taking the stock should resume its climb.  The stock price has not closed below its 10-day moving average since February.  One way to bet on a further climb would be to put on a bull put credit spread where the short strike was below the 20-day moving average.  Support is seen near the 10-day moving average at $136.92.

 

BABA Chart June 2017

*source Stockcharts.com

Buy To Open BABA 21Jul17 133 puts (BABA170728P133)
Sell To Open BABA 21Jul17 136 puts (BABA170728P136) for a credit of $1.12 (selling a vertical)

This price was $0.03 less than the mid-point of the option spread when BABA was trading slightly above $139.  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 $2 per contract (and there is no commission on closing trades, only the $.10 clearing fee).  Each contract would then yield $110 and your broker would charge a $300 maintenance fee, making your investment $190 ($300 – $110).  If BABA closes at any price above $136 on July 28, 2017, both options would expire worthless, and your return on the spread would be 58% (603% annualized).

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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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