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Terry's Tips Stock Options Trading Blog
May 19, 2019
Innovative Industrial Properties (IIPR) Has Nearly Doubled YTD, Will It Continue to Surge?
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
Innovative Industrial Properties (IIPR) Has Nearly Doubled YTD, Will It Continue to Surge?
IIPR has had an extremely impressive rally in the year thus far, the following two articles suggest it could continue the momentum – Hedge Funds Have Never Been More Bullish On Innovative Industrial Properties and If You Had Bought Innovative Industrial Properties Stock A Year Ago, You Could Pocket A 148% Gain Today.
The stock had been trading sideways for the last six weeks or so but in the past week, a bullish break out seems to have materialized as IIPR is seen climbing above $87.50. The horizontal level represents resistance that held the stock lower in late April and early May. Often when a stock has a strong rally, a consolidation period takes place prior to a bullish continuation. This particular stock makes a strong case for exactly such a scenario.
If you agree there's further upside ahead for IIPR, 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 IIPR 21JUN19 80 Puts (IIPR190621P80)
Sell To Open IIPR 21JUN19 85 Puts (IIPR190621P85) for a credit of $1.33 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when IIPR was trading near $89. 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 $130.50 and your broker would charge a $500 maintenance fee, making your investment $369.50 ($500 – $130.50). If IIPR closes at any price above $85 on June 21, both options would expire worthless, and your return on the spread would be 35% (399% 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
May 12, 2019
Wyndham Hotels & Resorts (WH) Technicals Point to More Upside
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
Wyndham Hotels & Resorts (WH) Technicals Point to More Upside
The following two articles suggest there could be more upside in WH. The first highlights a technical development while the second hints of bullish potential by way of how hedge funds are positioned. Take a look here – Moving Average Crossover Alert: Wyndham Hotels & Resorts and Here’s What Hedge Funds Think About Wyndham Hotels & Resorts.
In addition to the moving average crossover highlighted in the article above, the technicals for WH seem to suggest a new bullish leg could start from current levels after the brief consolidation that started in late April. The rationale being that the stock bounced sharply higher from a confluence of support on Friday that consists of a horizontal level that previously held the stock lower in February and April as well as the 20-day moving average. Also, the recovery from this confluence area combined with a higher close has resulted in a hammer candlestick pattern on a daily chart, a pattern that often signals a reversal from the prior correction.
If you agree there's further upside ahead for WH, consider this trade which is a bet that the stock will continue to advance over the next six weeks, or at least not decline very much.
Buy To Open WH 21JUN19 52.5 Puts (WH190621P52.5)
Sell To Open WH 21JUN19 55 Puts (WH190621P55) for a credit of $0.78 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when WH was trading near $56. 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 $75.50 and your broker would charge a $250 maintenance fee, making your investment $174.50 ($250 – $75.50). If WH closes at any price above $55 on June 21, both options would expire worthless, and your return on the spread would be 43% (402% 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
May 6, 2019
Should You Buy the Twitter (TWTR) Breakout?
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
Should You Buy the Twitter (TWTR) Breakout?
TWTR posted an impressive gain in April and several analysts expect it will continue to outperform. Take a look at the following two articles to see what they have to say about the stock – Why Twitter Stock Gained 21% in April and Twitter’s “Outperform” Rating Reiterated at CIBC.
A rally on the back of Twitter’s latest earnings report has resulted in a significant technical breakout as the stock managed to cross a highly respected resistance level found at $35. Essentially, the stock had consolidated in a range between roughly $27 and $35 in the prior 9 months. This technical break confirms a bullish trend, at least in the near-term. Upside resistance levels are seen near $42.50 which acted as support ahead of the July 2018 earnings report, followed by $46.75 which falls near last year’s highs.
If you agree there's further upside ahead for TWTR, consider this trade which is a bet that the stock will continue to advance over the next six weeks, or at least not decline very much.
Buy To Open TWTR 14JUN19 37.5 Puts (TWTR190614P37.5)
Sell To Open TWTR 14JUN19 40.5 Puts (TWTR190614P40.5) for a credit of $1.00 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when TWTR was trading near $41. 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 $97.50 and your broker would charge a $300 maintenance fee, making your investment $202.50 ($300 – $97.50). If TWTR closes at any price above $40.50 on June 14, both options would expire worthless, and your return on the spread would be 48% (449% 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
This Chicago brokerage firm with the unlikely name thinkorswim, Inc. by TD Ameritrade is considered by many to be the best option-friendly broker. For openers, they have extremely good analytic software and their option trading platform is exceptional. Thinkorswim Mobile has been called the best mobile app in the industry. In 2017, TD Ameritrade received 4 stars out of 5 in the annual Barron`s* Best Online Brokers Survey. TD Ameritrade was tops as an online broker for long-term investors and for novices. The company is the only broker that receives the highest 5.0 score for research amenities among all firms participated in the ranking last year.
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