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Posts Tagged ‘Monthly Options’

Is Stamps.com (STMP) Ready to Resume Higher?

Sunday, April 1st, 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

Is Stamps.com (STMP) Ready to Resume Higher?

Zacks research recently wrote a compelling article outlining why STMP is poised for further gains.  As well, this analyst believes there is potential for about a 30% upside based on their recent price target revision.

From a technical perspective, STMP has been consolidating sideways following a gap up in late February that was inspired by a stellar earnings report.  The consolidation is an indication of strength when considering that the markets have been under pressure as of late.  Buyers have stepped in to keep the stock trading above the $190 price point and an upside hurdle is seen around $210 as it has held the stock lower on a few attempts this year.

STMP Chart March 2018

STMP Chart March 2018

*source Tradingview.com

If you agree there’s further upside ahead for Stamps.com, 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 STMP 27APR18 192.5 Puts (STMP180427P192.5)
Sell To Open STMP 27APR18 195 Puts (STMP180427P195) for a credit of $0.98 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when STMP was trading near $201.  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 $95.50 and your broker would charge a $250 maintenance fee, making your investment $154.50 ($250 – $95.50).  If STMP closes at any price above $195.00 on April 27, both options would expire worthless, and your return on the spread would be 62% (778% annualized).

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

IBD Underlying Updates March 29, 2018

IBD Underlying Updates March 29, 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

Arista Networks (ANET): Should You Buy the Dip?

Monday, March 26th, 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

Arista Networks (ANET): Should You Buy the Dip?

Upside price targets for Arista Networks have recently been raised by several analysts, here are two of them – Arista Networks PT Raised to $270.00 at BMO Capital Markets and Arista Networks PT Raised to $330 at Oppenheimer Following Management Meetings

ANET dipped lower in the past week inline with the broader market correction that took place.  The stock price ended the week at a horizontal level near $264 that has acted as both support and resistance in the year thus far.  Further support is seen slightly below horizontal support in the form of a rising trendline originating from a low posted in early November.  Most of the stocks listed in the IBD Top 50 list of companies have dipped lower as a result of last week’s market correction but ANET stands out as it has had a strong performance, relative to the list, since turning higher in early 2016.

ANET Chart March 2018

ANET Chart March 2018

If you agree there’s further upside ahead for Arista Networks, 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 ANET 20APR18 255 Puts (ANET180420P255)
Sell To Open ANET 20APR18 260 Puts (ANET 180420P260) for a credit of $1.98 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when NVDA was trading near $265.  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 $196 and your broker would charge a $500 maintenance fee, making your investment $304 ($500 – $196).  If ANET closes at any price above $260.00 on April 20, both options would expire worthless, and your return on the spread would be 64% (735% annualized).

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

IBD Underlying Updates March 22, 2018

IBD Underlying Updates March 22, 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

Weibo Corp (WB) Surges On a Stellar Earnings Report, Can it Continue the Momentum?

Monday, February 26th, 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. At Terry’s Tips, we carry out actual portfolios for our subscribers to follow (either on their own or through Auto-Trade at their broker).  One of these portfolios places our Idea of the Week that we publish here.  So far in 2018, this portfolio has gained 69% and over half the portfolio value is now in cash since several of the put credit spreads that we sold earlier expired worthless over the past two weeks. I hope you enjoy these ideas that we pass along.

Terry

Weibo Corp (WB) Surges On a Stellar Earnings Report, Can it Continue the Momentum?

Several analysts have revised up their price targets after Weibo Corporation tripled Q4 earnings earlier this month.  Here are two of them – Weibo Corp (WB) PT Raised to $150 at Barclays and Weibo Corp (WB) PT Raised to $154 at Nomura; Momentum Remains Strong.

WB turned from trendline support earlier this month and was boosted to all-time highs following an impressive fourth-quarter earnings report.  Since breaking notable horizontal resistance at $132.21 the stock is seen consolidating sideways which is a common bullish continuation pattern after a sharp acceleration to the upside.

WB Chart February 2018

WB Chart February 2018

*source Tradingview.com

If you agree there’s further upside ahead for Weibo, 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 WB 23Mar18 138 Puts (WB180323P138)
Sell To Open WB 23Mar18 139 Puts (WB180323P139) for a credit of $0.48 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when WB was trading near $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 $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 $0.46 and your broker would charge a $100 maintenance fee, making your investment $54 ($100 – $46).  If WB closes at any price above $139.00 on March 23, both options would expire worthless, and your return on the spread would be 85% (1152% annualized).

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

IBD Underlying Updates February 22, 2018

IBD Underlying Updates February 22, 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 Floor & Decor (FND) stock offering an entry point?

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

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

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

Is Alibaba’s (BABA) Post-Earnings Dip a Buying Opportunity?

Monday, February 5th, 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 portfolios to spot outperforming stocks and place spreads that take advantage of the momentum.  By the way, while last week was the worst week for the market in several years, our most popular portfolio managed to gain 55% for the week after its underlying (Facebook) announced earnings.

Terry

Is Alibaba’s (BABA) Post-Earnings Dip a Buying Opportunity?

Several analysts believe there is further upside ahead for Alibaba, here are two of them – Alibaba PT Raised to $218 at Deutsche Bank and Alibaba PT Raised to $250 at Morgan Stanley.

Alibaba stock fell under pressure following last week’s earnings release and is seen trading near the halfway point measured from last month’s low to a high posted at the end of January.  Strong support is seen near the psychological $180 price point as it confluences with the lower line of a rising trend channel as well as the 61.8% Fibonacci retracement of the leg higher from early December.

BABA Chart January 2018

BABA Chart January 2018

*source Tradingview.com

If you agree there’s further upside ahead for Alibaba, 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 9Mar18 177.50 Puts (BABA180309P177.5)
Sell To Open BABA 9Mar18 180.00 Puts (BABA180309P180) for a credit of $0.85 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when BABA was trading near $187.  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 $83 and your broker would charge a $250 maintenance fee, making your investment $167 ($250 – $83).  If BABA closes at any price above $180.00 on March 9, both options would expire worthless, and your return on the spread would be 50% (567% annualized).

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

IBD Underlying Updates February 1, 2018

IBD Underlying Updates February 1, 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

Red Hat (RHT) is Set To Extend the Momentum

Monday, January 22nd, 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 portfolios to spot outperforming stocks and place spreads that take advantage of the momentum. We selected this same company six weeks ago, and the spread we placed at that time will have gained 60% by next Friday if the stock ends up above $123 at that time (it is about $126 right now).

Terry

Red Hat (RHT) is Set To Extend the Momentum

Red hat stock saw some strong gains in 2017 and several analysts believe there is further upside ahead including BMO Capital Markets who have raised their targets to $142.00 and Wells Fargo & Co who are looking for a rise to $144.00.

From a technical perspective, RHT has been consolidating sideways for a few months.  A confluence of support from a rising trendline dating back to a low posted in June and a horizontal level at $120.00 recently triggered a turn higher which has resulted in the stock price climbing back above its 50-period daily moving average.  The $130 handle may present a hurdle but a break of the level is likely to accompany a renewal of upside momentum.

 

RHT Chart January 2018

RHT Chart January 2018

*source Tradingview.com

If you agree there’s further upside ahead for Red Hat, 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 RHT 16Feb18 120 Puts (RHT180216P120)
Sell To Open RHT 16Feb18 125 Puts (RHT180216P125) for a credit of $1.83 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when RHT was trading near $126.  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 $181 and your broker would charge a $500 maintenance fee, making your investment $319 ($500 – $181).  If RHT closes at any price above $125 on February 16, both options would expire worthless, and your return on the spread would be 57% (647% annualized).

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

IBD Underlying Updates January 18, 2018

IBD Underlying Updates January 18, 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

Wingstop (WING) Rallies on Earnings Forecast, Can It Continue the Momentum?

Tuesday, January 16th, 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 portfolios to spot outperforming stocks and place spreads that take advantage of the momentum.  The Terry’s Tips actual portfolio that executes these trades has gained 26% in the first two weeks of 2018 and is our third-best performing portfolio so far in this new year.

Terry

Wingstop (WING) Rallies on Earnings Forecast, Can It Continue the Momentum?

Wingstop shares have already made an impressive gain in the first few weeks of the new year and several analysts believe there is further upside ahead.  CNBC has published an article outlining the factors driving the recent rally while Wingstop CEO Charlie Morrison shares his outlook for growth in a video interview with Jim Cramer.

Wingstop stock closed at a record high in the past week after taking out notable horizontal resistance around $43 which was also last year’s high.  The horizontal level is now seen as downside support and several retests of the level following the technical break have been met with buyers.

WING Chart January 2018

WING Chart January 2018

*source Tradingview.com

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

Buy To Open WING 16Feb18 40 Puts (WING180216P40)
Sell To Open WING 16Feb18 45 Puts (WING180216P45) for a credit of $1.28 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when WING 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 $126 and your broker would charge a $500 maintenance fee, making your investment $374 ($500 – $126).  If WING closes at any price above $45 on February 18, 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 January 11, 2018

IBD Underlying Updates January 11, 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

Adobe Systems (ADBE): Q4 Earnings Beat to Fuel Further Momentum

Monday, January 8th, 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 portfolios to spot outperforming stocks and place spreads that take advantage of the momentum. Speaking of our portfolios, I would like to share with you the exact report for 2017 that we sent to Terry’s Tips’ paying subscribers this week – “All of the portfolios except Boomers’ Revenge and Vista Valley have been reset for 2018. Boomers’ Revenge will start over with $5000 after the 1/19/18 spreads expire with an almost-certain gain of 56% for the “year” starting and ending on the third Friday of January.  The others:

  • Capstone Cascade – (restarted with $10,000 on 1/2/18) – 48% gain for 2017
  • Contango (our only portfolio not available for Auto-Trade – restarted with $5000 on 1/2/18) – 138% gain for 2017
  • Earnings Eagle (started with $5000 on 6/7/17) – 31% gain over last 6 months of 2017
  • Galloping Turtle (restarted with new strategy on 11/20/17 after withdrawal of $3960) –  79% gain for 2017
  • Honey Badger (restarted with $5000 using a new strategy on 12/26/17) – 48% loss for 2017, our only losing portfolio (fully recovered loss in the first week of 2018)
  • Leaping Leopard (restarted on 12/26/17 with $5000 after withdrawal of $2001) – 40% gain for 2017
  • Rising Tide (restarted on 1/2/18 with $5000 after withdrawal of $7615) – 152% gain for 2017
  • Vista Valley (restarted on 1/19/18 with $5000 after withdrawal of $5058) – 101% gain for 2017
  • Wiley Wolf (restarted on 11/8/17 with $5000 after $19,840 withdrawal) – 728% gain for 2017 as FB soared 56%.”

Terry

Adobe Systems (ADBE): Q4 Earnings Beat to Fuel Further Momentum

Two recent analyst upgrades suggest there is potential for a 10% upside in Adobe Systems stock price as BMO Capital Markets have recently raised their price targets to $205 and BofA have set a target of $220.

The technical outlook for ADBE is encouraging.  The stock posted a steady rally throughout 2017 for an annual gain of roughly 70%.  ADBE corrected lower in late November but bounced back after a test of horizontal support at 165.50 from a prior gap.  It has since recovered back above the 50-period daily moving average and is on the verge of breaking to new highs, suggesting the uptrend has resumed.

ADBE Chart January 2018

ADBE Chart January 2018

*source Tradingview.com

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

Buy To Open ADBE 16Feb18 180 Puts (ADBE180216P180)
Sell To Open ADBE 16Feb18 185 Puts (ADBE180216P185) for a credit of $1.85 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when ADBE was trading near $185.  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 $183 and your broker would charge a $500 maintenance fee, making your investment $317 ($500 – $183).  If ADBE closes at any price above $185 on February 18, both options would expire worthless, and your return on the spread would be 58% (540% annualized).

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

IBD Underlying Updates January 4, 2018

IBD Underlying Updates January 4, 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

Fleetcor Technologies (FLT) Likely to Cross $200 Mark

Tuesday, January 2nd, 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 portfolios to spot outperforming stocks and place spreads that take advantage of the momentum.  The 2017 trading year is over.  The 10 option portfolios carried out at Terry’s Tips gained an average of 113% for the year.  Only one portfolio lost money, and four of them earned over 100%.  It was the best year in our 16-year history.  We look forward to a similar outcome in 2018.  We invite you to come along for the ride.

Terry

Fleetcor Technologies (FLT) Likely to Cross $200 Mark

Two recent analyst upgrades suggest Fleetcor Technologies stock will cross the $200 point as Deutsche Bank has raised their price targets to $225 and Jefferies has raised their target to $218.

FLT posted a sixth consecutive week of gains in the past week and closed at an all-time record high.  In fact, the stock has only had three down weeks in the last 19 and each one of those declines was not very significant.  A rising trendline is in play that originates from a low posted in September and offers support near the $190 price point where the 20-period daily moving average is also found to add confluence.

FLT Chart January 2018

FLT Chart January 2018

*source Tradingview.com

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

Buy To Open FLT 16Feb18 185 Puts (FLT180216P185)
Sell To Open FLT 16Feb18 190 Puts (FLT180216P190) for a credit of $1.78 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when FLT was trading near $192.  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 $176 and your broker would charge a $500 maintenance fee, making your investment $324 ($500 – $176).  If FLT closes at any price above $190 on February 16, 2018, both options would expire worthless, and your return on the spread would be 54% (431% annualized).

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

IBD Underlying Updates December 28, 2017

IBD Underlying Updates December 28, 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

Red Hat (RHT) Dips Following Earnings, Is it A Buy?

Tuesday, December 26th, 2017

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 portfolios to spot outperforming stocks and place spreads that take advantage of the momentum.

We wish you the best of the holiday season…

Terry

Red Hat (RHT) Dips Following Earnings, Is it A Buy?

Red Hat stock pulled back in the past week after crushing third-quarter earnings targets.  Several analysts revised up their price targets both ahead and after the earnings report.  Here are two of them – Red Hat (RHT) PT Raised to $145 at Barclays, Sees a Strong Q3 Report Ahead and Red Hat (RHT) PT Raised to $150 at Deuthsche Bank on 3Q Beat & Raised FY Guidance.

RHT has seen a strong rally throughout the year and last week’s pullback has not altered the positive technical outlook.  A rising trendline dating back to a low posted in August remains intact and held the stock higher in the past week.  Horizontal support at the psychological $120.00 handle was found near the trendline line to add confluence.  In the absence of a bearish catalyst, the technicals suggests the stock can continue its uptrend from here.

RHT Chart December 2017

RHT Chart December 2017

*source Tradingview.com

If you agree there’s further upside ahead for Red Hat, consider this trade which is a bet that the stock will continue to advance, at least a little bit, over the next four weeks.

Buy To Open RHT 19 Jan 18 $122 Puts (RHT180119P122)
Sell To Open RHT 19 Jan 18 $123 Puts (RHT180119P123) for a credit of $0.50 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when RHT was trading near $123.  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 $48 and your broker would charge a $100 maintenance fee, making your investment $52 ($100 – $48).  If RHT closes at any price above $123 on January 19, 2018, both options would expire worthless, and your return on the spread would be 92% (1053% annualized).

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

IBD Underlying Updates December 21, 2017

IBD Underlying Updates December 21, 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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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