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Posts Tagged ‘SPY’

Horizon Therapeutics (HZNP) Has More Than Doubled in 2020

Monday, September 21st, 2020

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.

HZNP has gained 120% YTD and several analysts expect it will continue to march higher. Check out the following two reports for several reasons why the company is likely to remain in demand – 5 Reasons to Invest in Horizon Therapeutics Amid Coronavirus and Hedge Funds Never Been This Bullish On Horizon Therapeutics (HZNP).

Technicals

When stocks are in a strong bullish trend, there are often periods of consolidation that are followed by a continuation higher. HZNP shows exactly this pattern as the stock consolidated in a sideways range for six weeks before finally breaking higher in the past week. The same $76 price point that previously acted as resistance has acted as support following the bullish range breakout which is also a positive sign. In the event the stock dips below $76, there is strong support from a rising trendline that has been in play for nearly six months.

HZNP Chart September 2020

HZNP Chart September 2020

If you agree there’s further upside ahead for HZNP, consider this trade which relies on the stock remaining above $80 through the expiration on October 16.

Buy To Open HZNP 16OCT20 75 Puts (HZNP201016P75)
Sell To Open HZNP 16OCT20 80 Puts (HZNP201016P80) for a credit of $2.13 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when HZNP was trading near $80.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $211.70. This reduces your buying power by $500 and makes your investment $288.30 ($500 – $211.70).  If HZNP closes at any price above $80 on October 16, both options will expire worthless, and your return on the spread would be 73% ($211.70 / $288.30), or 1066% 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.

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

Happy trading,

Terry

Dollar General (DG) Looks Set to Continue the Steady Rise

Monday, September 14th, 2020

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.

Several Analysts have good things to say about DG, here are two of them – 2 Top Stocks to Buy in September and Hedge Funds Keep Buying Dollar General Corp.

Technicals

DG has been trading within a rising trend channel for just over four months. The 50-day moving average is currently near the lower boundary of the channel to offer a confluence of support. A test of this support zone in the past week resulted in a move higher which shows that buyers are willing to defend this area. In addition to the steady trend, DG has outperformed most of the stocks on the IBD Top 50 list over the past few weeks.

DG Chart September 2020 - Rising Trend

DG Chart September 2020

If you agree there’s further upside ahead for DG, consider this trade which relies on the stock remaining above $200 through the expiration on October 16.

Buy To Open DG 16OCT20 195 Puts (DG201016P195)
Sell To Open DG 16OCT20 200 Puts (DG201016P200) for a credit of $1.98 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when DG was trading near $200.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $196.70. This reduces your buying power by $500 and makes your investment $303.30 ($500 – $196.70).  If DG closes at any price above $200 on October 16, both options will expire worthless, and your return on the spread would be 65% ($196.70 / $303.30), or 741% annualized.

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

IBD Underlying Updates September 12, 2020

IBD Underlying Updates September 12, 2020

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

Microsoft (MSFT) – Recent Tech Sell-Off Offers a Buying Opportunity

Monday, September 7th, 2020

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 following two articles offer compelling reasons why MSFT could move higher. The first is an analyst upgrade with a price target of $240 – Microsoft Stock (MSFT) Gets Price Target Increase To $240 From Mizuho. The second article outlines MSFT’s competitive advantages –  2 Tech Stocks That Are Thriving Despite the Coronavirus.

Technicals

We offered a trade idea in MSFT at the start of August and the option spread used in the idea expired for a 74% profit on Friday. Because of the decline over the past few days, the stock is once again testing the same trendline that made the trade attractive last time around. The 50-day moving average is also in play and this is an indicator the stock has not closed below in over four months. Friday’s candlestick formation signals buying activity and that the support confluence is being defended, at least so far.

MSFT Chart September 2020

MSFT Chart September 2020

If you agree there’s further upside ahead for MSFT, consider this trade which relies on the stock remaining above $212.50 through expiration on October 9.

Buy To Open MSFT 09OCT20 210 Puts (MSFT201009P210)
Sell To Open MSFT 09OCT20 212.5 Puts (MSFT201009P212.5) for a credit of $1.20 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when MSFT was trading near $214.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $118.70. This reduces your buying power by $250 and makes your investment $131.30 ($250 – $118.70).  If MSFT closes at any price above $212.50 on October 9, both options will expire worthless, and your return on the spread would be 90% ($118.70 / $131.30), or 1027% annualized.

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

IBD Underlying Updates September 5, 2020

IBD Underlying Updates September 5, 2020

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

Netflix (NFLX) Regains Upward Momentum

Monday, August 31st, 2020

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.

NFLX rallied to a six-week high in the past week and shows the potential to continue higher. The following two articles outline reasons why the stock could continue the momentum – Hooking Up or Locking Down, Netflix Poised to Win Either Way, and Netflix (NFLX) Back in Rally Mode After Brief Correction.

Technicals

NFLX has rallied above a horizontal level near $510, which hints that the correction from mid-July to mid-August may have ended. The same level contained an earlier range and may now act as support on near-term declines. There is further support from the lower boundary of a trend channel that has encompassed the price action since March.

NFLX Chart August 2020 regains upward momentum

NFLX Chart August 2020

If you agree there’s further upside ahead for NFLX, consider this trade, which relies on the stock remaining above the 520 level during the next five weeks:

Buy To Open NFLX 2OCT20 515 Puts (NFLX201002P515)
Sell To Open NFLX 2OCT20 520 Puts (NFLX201002P520) for a credit of $3.30 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when NFLX was trading near $524. Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $328.70. This reduces your buying power by $500 and makes your investment $171.30 ($500 – $328.70).  If NFLX closes above $520 on October 2, both options will expire worthless, and your return on the spread would be 192% ($328.70 / $171.30), or 2,190% annualized.

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

IBD Underlying Updates August 29, 2020

IBD Underlying Updates August 29, 2020

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

Alibaba (BABA) Looks Appealing After Strong First Quarter Results

Monday, August 24th, 2020

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.

Several analysts expect more upside for BABA’s stock price. Check out what the following two reports had to say about it – Post-Earnings Alibaba (BABA) Opportunity and Will Alibaba Be the Next Trillion-Dollar Giant?

Technicals

From a technical perspective, BABA has been consolidating within a triangle for the better part of two months. More specifically, the stock is holding in an ascending triangle, a pattern that is bullish. The stock has not yet broken higher from it, but the recent upward momentum hints that it is only a matter of time. Typically, when a consolidation pattern like this is broken, the stock sees a renewal of upward momentum.

BABA Chart August 2020

BABA Chart August 2020

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

Buy To Open BABA 25SEP20 262.5 Puts (BABA200925P262.5)
Sell To Open BABA 25SEP20 265 Puts (BABA200925P265) for a credit of $1.23 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when BABA was trading near $266.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $121.70 while your buying power would be reduced by $250, making your net  investment $128.30 ($250 – $121.70).  If BABA closes at any price above $265 on September 25, both options would expire worthless, and your return on the spread would be 95% (121.70/128.30), or 1,084% annualized.

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

IBD Underlying Updates August 22, 2020

IBD Underlying Updates August 22, 2020

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

Should You Buy Amazon (AMZN) Following Its Earnings Report?

Monday, August 10th, 2020

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.

Amazon had a strong quarter and the following two articles outline the earnings report and why the stock may head higher from here – Amazon (AMZN) Q2 Earnings and Revenues Top Estimates and Why Amazon Stock Climbed 14% Last Month.

Technicals

From a technical perspective, AMZN was held lower by a horizontal resistance level near $3250 on the rally that followed the recent earnings report. However, from a broader perspective, the stock has been firmly bid from a rising trendline that originates back to a low posted in March. Considering how long this trendline has been in place, and the long-term trend, the resistance at $3250 does not appear to be a big hurdle and it may only be a matter of time before this stock is trading at fresh all-time highs.

AMZN Chart August 2020 earnings announcment

AMZN Chart August 2020

If you agree there’s further upside ahead for AMZN, 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 AMZN 11SEP20 3160 Puts (AMZN200811P3160)
Sell To Open AMZN 11SEP20 3165 Puts (AMZN200811P3165) for a credit of $2.40 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when AMZN was trading near $3165.  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 $1.30 per spread.  Each contract would then yield $238.70 and your broker would charge a $500 maintenance fee, making your investment $261.30 ($500 – $238.70).  If AMZN closes at any price above $3165 on September 11, both options would expire worthless, and your return on the spread would be 91% (1038% annualized).

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

IBD Underlying Updates August 8, 2020

IBD Underlying Updates August 8, 2020

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

The Dip in Microsoft (MSFT) Offers a Buying Opportunity

Monday, August 3rd, 2020

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.

Microsoft has dipped lower over the past few weeks, but several analysts think the broader outlook calls for more upside. Check out the following two articles which discuss the recent earnings report and how the pros outweigh the cons for MSFT investors – Microsoft revenue grew 13% despite coronavirus and Should You Buy Microsoft (MSFT) Stock?

Technicals

From a technical perspective, there are a few things that make MSFT attractive at current prices. First, there is a trendline in place that extends back to lows posted in April and the stock is seen bouncing from it. Further, this same trendline is intersecting with the $200 level which is seen as a support level. In addition to support confluence, there is a candlestick pattern on a weekly chart that suggests a bullish reversal may be taking place.

MSFT Chart August 2020 buy dip in all time high

MSFT Chart August 2020

If you agree there’s further upside ahead for MSFT, 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 MSFT 4SEPT20 202.5 Puts (MSFT20084P202.5)
Sell To Open MSFT 4SEPT20 205 Puts (MSFT20084P205) for a credit of $1.08 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when MSFT was trading near $205.  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 $1.30 per spread.  Each contract would then yield $106.70 and your broker would charge a $250 maintenance fee, making your investment $143.30 ($250 – $106.70).  If MSFT closes at any price above $205 on September 4, both options would expire worthless, and your return on the spread would be 74% (844% annualized).

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

IBD Underlying Updates August 1, 2020

IBD Underlying Updates August 1, 2020

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

Netflix is Ready to Break to a Fresh Record High

Monday, June 22nd, 2020

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.

Netflix closed the past week out strong and looks ready to continue the upward momentum. Take a look at what the following analysts had to say about the stock – Netflix ‘Impervious’ To Coronavirus, Recession: Imperial Capital and Netflix Stock: An Easy 2x

Technicals

NFLX falls in a group of stocks that were quick to recover from the sell-off earlier in the year.The stock has been consolidating within a range since mid-April but the upward momentum seen over the last week or so, combined with a strong weekly close, tilts the odds towards an upward break, in line with the broader trend. To the downside, $416 is considered to be a major support level and has held the stock higher on a weekly close basis. This same level previously served as resistance, holding NFLX lower in 2018. A break above $455 would signal a bullish continuation that stands to attract more buyers and a potential acceleration in momentum.

NFLX Chart June 2020

NFLX Chart June 2020

If you agree there’s further upside ahead for NFLX, 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 NFLX 24JUL20 445 Puts (NFLX200724P445)
Sell To Open NFLX 24JUL20 450 Puts (NFLX200724P450) for a credit of $2.24 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when NFLX was trading near $453.  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 $1.30 per spread.  Each contract would then yield $222.70 and your broker would charge a $500 maintenance fee, making your investment $277.30 ($500 – $222.70).  If NFLX closes at any price above $450 on July 24, both options would expire worthless, and your return on the spread would be 80% (913% annualized).

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

IBD Underlying Updates June 20, 2020

IBD Underlying Updates June 20, 2020

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

Zoom Video Communications (ZM) Remains a Top Performer in Today’s Markets

Monday, June 1st, 2020

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.

Zoom Video was criticized a few months back for security and other concerns, but nevertheless, the stock continued higher. It looks even more appealing now as the company continues to gain market share and the prior concerns are no longer weighing on the company’s stock price. Several analysts share the same bullish outlook, here are two of them – Here’s Why Zoom Stock Has Been Soaring — and What to Expect Going Forward and Hedge Funds Have Never Been This Bullish On Zoom Video Communications, Inc. (ZM).

Technicals

From a technical perspective, ZM has been held higher by a rising trendline for most of the year. The stock tested this trendline in the past week and in a matter of days it was on the verge of breaking to an all-time high. The stock has been well bought on dips in general and the momentum is firm to the upside. The $180 level could prove to be a short-term hurdle but there is little reason to believe this stock will not break to all-time highs.

ZM Chart June 2020 COVID stocks surge

ZM Chart June 2020

If you agree there’s further upside ahead for ZM, 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 ZM 10JUL20 177.5 Puts (ZM200710P177.5)
Sell To Open ZM 10JUL20 180 Puts (ZM200710P180) for a credit of $1.33 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when ZM was trading near $180.  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 $1.30 per spread.  Each contract would then yield $131.70 and your broker would charge a $250 maintenance fee, making your investment $118.30 ($250 – $131.70).  If ZM closes at any price above $180 on July 10, both options would expire worthless, and your return on the spread would be 111% (1266% annualized).

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

IBD Underlying Updates May 30, 2020

IBD Underlying Updates May 30, 2020

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

American Tower (AMT) Looks Attractive as Investors Once Again Focus on 5G

Monday, May 18th, 2020

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.

5G was a hot topic among investors ahead of the Coronavirus escalation. Now that the markets are picking up momentum again, companies that stand to gain from this technology are in the spotlight. Take a look at the following article which discusses how AMT stands to gain – 5G Is Still Coming Despite Covid-19. These Are the Stocks Set to Benefit First. Also, have a look at this article – 5G Will Be a Game-Changer for American Tower. It mentions that the stock may see some near-term weakness and that investors should take advantage of that. Interestingly, the stock has shown exactly that as it has pulled back from recent highs since the article was written.

Technicals

Two things stand out in the recent price action for AMT. First, it was able to rally to fresh record highs in April. Although it was brief, it shows strength and provides some confirmation that the uptrend remains intact. The second appeal is that the stock is currently testing its 200-day moving average. This particular indicator was well-respected in late 2019 and managed to hold the stock higher on several tests. It’s one of the more commonly watched moving averages and technical traders will be well aware of its presence.

AMT Chart May 2020: 5G stock resurgance despite COVID

AMT Chart May 2020

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

Buy To Open AMT 19JUN20 220 Puts (AMT200619P220)
Sell To Open AMT 19JUN20 230 Puts (AMT200619P230) for a credit of $3.48 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when AMT was trading near $230.  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 $1.30 per spread.  Each contract would then yield $346.70 and your broker would charge a $1000 maintenance fee, making your investment $653.30 ($1000 – $346.70).  If AMT closes at any price above $230 on June 19, both options would expire worthless, and your return on the spread would be 53% (605% annualized).

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

IBD Underlying Updates May 16, 2020

IBD Underlying Updates May 16, 2020

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