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Posts Tagged ‘profits’

Electronic Arts (EA) Stock Appears Undervalued After Analyst Upgrades

Tuesday, September 12th, 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.

Also, don’t forget that we are now offering our

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This is a time-limited offer.  You must order by Monday, September 18, 2017.  That’s when the half-price offer expires, and you will have to go back to the same old investment strategy that you have had limited success with for so long (if you are like most investors).

Terry

Electronic Arts (EA) Stock Appears Undervalued After Analyst Upgrades

Analysts at Goldman Sachs are optimistic of the gaming industry and have initiated Electronic Arts with a Buy and a $136 price target.  Several other analysts have rated the stock as a Buy including the Jefferies Group who have recently restated their rating with a $135 price target.

 

From a technical perspective, EA has recently scaled above a notable hurdle at $116 which had capped gains in June.  Dips towards the level have been met with buyers since the middle of September, establishing the horizontal level as strong support.  A rising trend channel has encompassed price action since late July and the lower bound of the channel offers additional support slightly ahead of the horizontal level.

*source Tradingview.com

If you agree there’s further upside ahead for Electronic Arts, 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 EA 20Oct17 110 Puts (EA171020P110)
Sell To Open EA 20Oct17 115 Puts (EA171020P115) for a credit of $1.35 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when EA was trading near $118.  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 $133 and your broker would charge a $500 maintenance fee, making your investment $367 ($500 – $133).  If EA closes at any price above $115 on October 20, 2017, both options would expire worthless, and your return on the spread would be 36% (314% annualized).

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

 

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.  It is interesting to see that MA was removed from the list this week.  This seems unusual since the stock moved up almost $4 last week.  This is the stock that is traded in the Terry’s Tips  portfolio called Rising Tide.  This portfolio has gained 120% so far in 2017 while MA has gained 31%.  We have almost done 4 times as great as the stock price increase.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Facebook (FB) Is Set To Resume Higher After The Price Correction

Monday, September 4th, 2017

This week we are discussing a well-known company that is listed on the Investor’s Business Daily (IBD) Top 50 List.  In one of our portfolio’s, we screen this list to identify trending stocks to place spreads that profit if the stock continues higher.  Actually, the stock can even decline a little to realize the maximum gain.

Terry’s Tips carries out 10 different portfolios for paying subscribers.  Each portfolio is set up in an actual broker account and all results include full commissions.  Last week was an unusually good one for these portfolios – every one of them made gains, and the average composite gain was a whopping 8.9%.  So far in 2017, these portfolios have picked up an average of 67.8%.  How sweet it is.

Terry

Facebook (FB) Is Set To Resume Higher After The Price Correction

Several analysts believe there is further upside ahead for Facebook, here are two of them – Why Facebook Inc (FB) Stock Can Still Run Much Higher and Flagging Facebook Inc (FB) Stock for a Bullish Breakout.

The second article identifies a bull flag pattern which offers a technical signal for a bullish continuation.  Alternatively, the price action that takes place from around the end of July to late September can be viewed as a pennant.  Both patterns signal the same thing which is a continuation of the bullish trend.

Continuation patterns tend to be respected by technical traders, especially when it follows a strong uptrend which has been the case with Facebook.

FB Chart September 2017

FB Chart September 2017

*source Tradingview.com

If you agree there’s further upside ahead for Facebook, 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 FB 20Oct17 165 Puts (FB171020P165)
Sell To Open FB 20Oct17 170 Puts (FB171020P170) for a credit of $1.59 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when FB was trading near $172.  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 $157 and your broker would charge a $500 maintenance fee, making your investment $343 ($500 – $157).  If FB closes at any price above $170 on October 20, 2017, both options would expire worthless, and your return on the spread would be 46% (340% annualized).

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

IBD Underlying Updates September 1, 2017

IBD Underlying Updates September 1, 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

Is Applied Materials (AMAT) Ready to Accelerate Higher?

Monday, August 28th, 2017

This week we are featuring a company listed on the Investor’s Business Daily (IBD) Top 50 List.  We use this list in one of our portfolios to target outperforming stocks and look to place options spreads that take advantage of the underlying trend..

You might be interested to know that Terry’s Tips carries out 10 actual options portfolios for paying subscribers to follow if they wish.  This week was a typical one for us.  The market (SPY) rose 0.8% while our composite portfolio average gained 2.8%.  So far for the year, our composite average has gained 54% (after commissions).

Terry

Is Applied Materials (AMAT) Ready to Accelerate Higher?

Several analysts have recently refreshed their bullish outlook towards Applied Materials and have raised price targets.  These articles provide more details Applied Materials Gets Several Price-Target Hikes on Earnings and Applied Materials Targets Surge On Upbeat Memory Chip, Display Markets.

From a technical perspective, AMAT has been consolidating within a range since around May with buyer’s holding the stock well above the $40.00 price point.  Buyer’s lifted the price higher about two weeks ago on an approach to the lower bound of the range.  While a horizontal level at $43.06 initially acted as resistance in the turn, the level held several declines in the past week.  AMAT shows a strong bullish trend on a weekly chart dating back to early 2016, and like several of the IBD Top 50 stocks, has been an outperformer within its sector.

AMAT Chart August 2017

AMAT Chart August 2017

*source Tradingview.com

If you agree there’s further upside ahead for Applied Materials, 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 AMAT 29Sep17 42.5 Puts (AMAT170929P425)
Sell To Open AMAT 29Sep17 43 Puts (AMAT1700929P430) for a credit of $0.17 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when AMAT was trading near $43.  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 $15 and your broker would charge a $50 maintenance fee, making your investment $35 ($50 – $15).  If AMAT closes at any price above $43 on September 29, 2017, both options would expire worthless, and your return on the spread would be 43% (446% annualized).

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

IBD Underlying Updates August 25, 2017

IBD Underlying Updates August 25, 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

Global Payments (GPN) Poised to Break $100 Mark

Tuesday, August 8th, 2017

This week we are discussing a new addition to the Investor’s Business Daily (IBD) Top 50 List.  We use this list in one of our portfolios to identify stocks that have displayed strong upward momentum and place spreads to profit from the underlying trend.  Actually, the stock price can even fall a little bit for the maximum gain to be realized.

Terry

Global Payments (GPN) Poised to Break $100 Mark

Several analysts have recently refreshed their bullish targets for GPN.  Here are two of them – Wells Fargo Upgrades Global Payments (GPN) to Outperform and Global Payments price target raised to $105 from $98 at Barclays.

GPN boasts a strong uptrend and has recently broken above major resistance at $93.31 after correcting lower for five weeks.  The stock has regained its 20-day moving average following a turn higher in the second week of July and broke to all-time highs on Friday.

GPN Chart August 2017

GPN Chart August 2017

*source Tradingview.com

If you agree there’s further upside ahead for Global Payments, 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 GPN 15SEP17 90 Puts (GPN170915P90)
Sell To Open GPN 15SEP17 95 Puts (GPN170915P95) for a credit of $1.00 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when GPN was trading near $98.  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 $98 and your broker would charge a $500 maintenance fee, making your investment $402 ($500 – $98).  If GPN closes at any price above $95 on September 15, 2017, both options would expire worthless, and your return on the spread would be 24% (211% annualized).

If you think there’s further upside ahead for Global Payments, consider this trade which is a bet that the stock will continue to advance.

Buy To Open GPN 15SEP17 95 Puts (GPN170915P95)
Sell To Open GPN 15SEP17 100 Puts (GPN170915P100) for a credit of $2.33 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when GPN was trading near $98 at the close yesterday.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

If you use tastyworks, your commission on this trade, each contract would then yield $231 and your broker would charge a $500 maintenance fee, making your investment $269 ($500 – $231).  If GPN closes at any price above $100 on September 15, 2017, both options would expire worthless, and your return on the spread would be 86% (744% annualized).

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

IBD Underlying Updates August 4, 2017

IBD Underlying Updates August 4, 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

Transunion (TRU): A Stable and Consistent Player

Monday, July 31st, 2017

This week we are discussing another one of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our portfolio’s to find stocks that have displayed consistent upwards momentum and we look to place spreads that take advantage of this underlying strength.

Terry

Transunion (TRU): A Stable and Consistent Player

Several analysts have recently refreshed their bullish outlook towards Transunion.  UBS Asset Management has increased their stake in the company and both Morgan Stanley as well as Deutsche Bank have raised their price targets to $50.

Transunion has been trading higher within a rising trend channel since the middle of February.  After testing the lower line of the trend channel in the past week, the stock recovered to hit a fresh 52-week high.  The $44.45 level held the stock price lower for a month prior to finally breaking above it earlier this month.  The level is now viewed as support and its proximity to the 20-day moving average as well as the channel bottom emphasizes the area as strong support.

 

TRU Chart July 2017

TRU Chart July 2017

*source Tradingview.com

If you concur that there’s further upside ahead for Transunion, consider this trade which is a bet that the stock will continue to advance, at least a little.

Buy To Open TRU 15SEP17 45 Puts (TRU170915P45)
Sell To Open TRU 15SEP17 46 Puts (TRU170915P46) for a credit of $0.46 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when TRU was trading just above  $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 $44 and your broker would charge a $100 maintenance fee, making your investment $56 ($100 – $44).  If TRU closes at any price above $46 on September 15, 2017, both options would expire worthless, and your return on the spread would be 78% (624% annualized).

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

IBD Underlying Updates July 31, 2017

IBD Underlying Updates July 31, 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.  The Terry’s Tips portfolio which places spreads like the above one has gained 114.7% so far in 2017 in spite of incurring some losses on some of the spreads placed.  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 Taiwan Semiconductor (TSM) Ready To Resume Higher?

Tuesday, July 18th, 2017

This week we are featuring a company that was just added to the Investor’s Business Daily (IBD) Top 50 List.  I hope that it is of interest to you.  The Terry’s Tips’  portfolio that places trades on our selections from the IBD Top 50 List has gained 117.7% so far in 2017.  Terry’s Tips subscribers who have trades placed in their accounts through Auto-Trade or who follow the portfolio on their own are happy campers right now.

Terry

Is Taiwan Semiconductor (TSM) Ready To Resume Higher?

Taiwan Semiconductor has been gaining popularity among investors as the company supplies key components used in the Iphone.  Apple’s smartphone saw sales exceeding 50 million units last quarter.  These analysts weigh in on why there may be further upside ahead for Taiwan Semiconductor’s stock price – 3 Things This Apple Inc. Supplier Wants You to Know and How To Become A Billionaire In One Step: Sell Components To Apple.

The technical indicators point to a healthy uptrend in TSM.  The stock price recently bounced higher from support at $34.42 and has regained the 20-day moving average.  The stock has held above the same moving average on a weekly chart for most of this year.  A rising trend channel has been in play since May last year and the lower line of the channel offers additional support near recent lows.

TSM Chart July 2017

TSM Chart July 2017

*source Tradingview.com

If you concur Taiwan Semiconductor is ready to resume higher, 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 TSM 18Aug17 34 Puts (TSM170818P34)
Sell To Open TSM 18Aug17 35 Puts (TSM170818P35) for a credit of $0.21 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when TSM was trading near $36.  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 $19 and your broker would charge a $100 maintenance fee, making your investment $81 ($100 – $19).  If TSM closes at any price above $35 on August 18, 2017, both options would expire worthless, and your return on the spread would be 23% (299% annualized).

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

IBD Underlying Updates July 14, 2017

IBD Underlying Updates July 14, 2017

IBD Underlying Updates July 14, 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.  The Terry’s Tips portfolio which places spreads like the above one has gained 80% in the first six months of 2017 in spite of incurring some losses on some of the spreads placed.  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

Consider NutriSystem (NTRI) After The Price Correction

Monday, July 10th, 2017

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 companies.  In one of our portfolios, we use this list to find stocks that have displayed strong upward momentum and place option trades that take advantage of the trend.

Terry

Consider NutriSystem (NTRI) After The Price Correction

Several research firms have recently upgraded their rating on NutriSystem, the following article provides some details – NutriSytem Inc Receives Consensus Rating of “buy” from Brokerages.  As well, some big players upped their exposure to NutriSystem in the first quarter which is discussed in this article – Swiss National Bank Boosts Stake In NutriSystem Inc.

From a technical perspective, NTRI broke higher from a bullish flag pattern in late June to signal that a seven-week correction from a high posted in April may have completed.

The stock has been trending higher since 2013 and an acceleration of upside momentum is seen from early 2016.  NutriSystem broke above the 100-day moving average in the second quarter of 2016 and aside from a very brief dip below the indicator in January and June this year, the stock has held above it.

NTRI Graph July 2017

NTRI Graph July 2017

*source Tradingview.com

If you agree there’s further upside ahead for NutriSystem, 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 NTRI 18Aug17 45 Puts (NTRI170818P40)
Sell To Open NTRI 18Aug17 50 Puts (NTRI170818P45) for a credit of $1.48 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when NTRI was trading near $52.  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 $146 and your broker would charge a $500 maintenance fee, making your investment $354 ($500 – $146).  If NTRI closes at any price above $50 on August 18, 2017, both options would expire worthless, and your return on the spread would be 41% (355% annualized).

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

IBD Underlying Updates July 7, 2017

IBD Underlying Updates July 7, 2017

IBD Underlying Updates July 7, 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.  The Terry’s Tips portfolio which places spreads like the above one has gained 80% in the first six months of 2017 in spite of incurring some losses on some of the spreads placed.  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

Align Technology (ALGN) A Buy After Being Added To The S&P 500

Monday, July 3rd, 2017

This week we are featuring a company listed on the Investor’s Business Daily (IBD) Top 50 List that has also recently been added to the S&P 500 index.  The stock has displayed strong upwards momentum and we look to place spreads that take advantage of this underlying strength.

Terry

Align Technology (ALGN) A Buy After Being Added To The S&P 500

Align Technology is the designer and manufacturer of the Invisalign System which they state is the most advanced clear aligner system in the world.  Analysts are optimistic of the company’s growth prospects and have recently revised up their expectations.  Zacks ranks this stock as a Strong Buy and these analysts have recently raised their targets: Align Technology (ALGN) PT Raised to $175 at Morgan Stanley; Huge At-Home Ortho Opportunity and Leerink Lifts Target On Align Technology, Sees 27% Upside.

From a technical perspective, ALGN boasts a strong uptrend and trades above key technical indicators.  On a daily chart, the stock jumped above the 20-day moving average following an earnings report in January and has held above it since.

A rising trend channel has been identified to contain price action since late April and a horizontal level at $145.24 offers additional support to create a confluence near the lower bound of the trend channel.

ALGN Chart July 2017

ALGN Chart July 2017

*source Tradingview.com

If you agree there’s further upside ahead for Align Technology, 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 ALGN 18Aug17 140 Puts (ALGN170818P140)
Sell To Open ALGN 18Aug17 145 Puts (ALGN170818P145) for a credit of $1.60 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when ALGN was trading near $150.  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 $158 and your broker would charge a $500 maintenance fee, making your investment $342 ($500 – $158).  If ALGN closes at any price above $145 on August 18, 2017, both options would expire worthless, and your return on the spread would be 46% (342% annualized).

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

IBD Underlying Updates July 1, 2017

IBD Underlying Updates July 3, 2017

IBD Underlying Updates June 30, 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.  The Terry’s Tips portfolio which places spreads like the above one has gained 80% in the first six months of 2017 in spite of incurring some losses on some of the spreads placed.  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

Merck Breaks Out, can it Continue to Trade Higher?

Wednesday, June 28th, 2017

This week we are featuring an option trading idea based on a stock that just broke out following the Senate healthcare bill.  I hope that it is of interest to you.

Terry

Merck Breaks Out, can it Continue to Trade Higher?
Merck, broke out to fresh all-time highs last week following news from the proposed senate bill that would allow for less regulation and would not crack down on drug pricing.  The Senate appears to be moving toward a vote, which should keep MRK buoyed.

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

Technicals

After breaking out, prices are consolidating above the recent breakout level.  The stock should remain above a downward sloping trend line that shows support near $65. Additional support is seen near the 20-day moving average at $64.33.  Momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal.

MRK Chart June 2017

MRK Chart June 2017

*source Stockcharts.com

Buy To Open MRK AUG18   62.50 puts (MRK170818P625
Sell To Open MRK AUG18   65.00 puts (MRK170818P650) for a credit of $0.65 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when MRK was trading slightly above $66.20.  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 spread (and there is no commission on closing trades, only the $.10 clearing fee).  Each contract would then yield $63 and your broker would charge a $250 maintenance fee, making your investment $187 ($250 – $63).  If MRK closes at any price above $65 on August 18, 2017, both options would expire worthless, and your return on the spread would be 34% (230% annualized).

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Lumentum Holdings (LITE) Is Coiling For An Up Move

Tuesday, June 27th, 2017

This week we are looking at another company listed on the Investor’s Business Daily (IBD) Top 50 List.  We use this list in our portfolio to find stocks that have been strongly trending higher and this week’s stock is an outperformer which has done exactly that.  The Terry’s Tips ’ portfolio that uses this list as its source for underlying ideas is now up 90.3% for the year to date.

Terry

Lumentum Holdings (LITE) Is Coiling For An Up Move

Lumentum Holdings hit all-time highs earlier this month and analysts believe there’s further upside ahead.  Here are two articles that reveal where Lumentum could be heading and why – Lumentum (LITE) PT Raised to $80 at Needham & Company; 3D Sensing Could Double LITE’S Value and DA Davidson Starts Lumentum (LITE) at Buy.

The technical outlook for LITE is solid.  The stock has been trending higher for over a year and a half and an acceleration of momentum can be seen since the start of May, shortly after the company announced earnings.

The earnings report caused a gap above the 20-day moving average and the stock has held above it since.  In addition to the moving average, horizontal support has been identified at $60.50 which held a decline earlier this month.

Lumentum has been consolidating sideways in a range over the past two weeks which is common in strong bullish trends.  A break of the upper end of the range, identified at $65.30, is likely to accompany an acceleration to the upside.

Lumentum Chart June 2017

Lumentum Chart June 2017

*source Tradingview.com

If you agree there’s further upside ahead for Lumentum, 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 LITE 18Augy17 55 Puts (LITE170818P55)
Sell To Open LITE 18Aug17 60 Puts (LITE170818P60) for a credit of $1.73 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when LITE was trading at $64.  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 spread (and there is no commission on closing trades, only the $.10 clearing fee).  Each contract would then yield $171 and your broker would charge a $500 maintenance fee, making your investment $329 ($500 – $171).  If LITE closes at any price above $60 on August 18, 2017, both options would expire worthless, and your return on the spread would be 52% (312% annualized).

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

IBD Underlying Updates June 23, 2017

IBD Underlying Updates June 23, 2017

IBD Underlying Updates June 23, 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.  As we said above, the Terry’s Tips portfolio which places spreads like the above one has gained 90% in the first six months of 2017 in spite of incurring some losses on some of the spreads placed.  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