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.

I thought I might share with you the first paragraph of this week’s report to our paying subscribers – “Bad Week for the Market (Down 1%), But Our Composite Portfolio Average Gains 5% Thanks to Blow-Out Week for Wiley Wolf (up 47%): A week ago, we were celebrating a 26.5% gain in Wiley Wolf when FB gained 3.6%, but that was nothing compared to this week’s colossal 47.6% gain on a 3.0% rise in the stock.  In two weeks, the portfolio has moved from a value of $4,472 to today’s $8,353.  The 10K Strategy can deliver extraordinary results when you are leaning to the bullish side and the underlying cooperates by going up (which you expect it to do or you wouldn’t have selected that stock in the first place).  Positive results from this strategy also appeared this week in Rising Tide where the portfolio gained 10% while the underlying MA rose 1%.”

I hope you enjoy this week’s trading idea.

Terry

Lululemon (LULU) Stock Price Surges Following Earnings

LULU rose to record highs earlier this month following its earnings report.  Several analysts think the stock can go a lot higher, here are two of them – Was Lululemon Athletica Inc’s Earnings Growth Better Than The Industry’s? and 7 Debt-Free Companies Doing Big Stock Buybacks

Lululemon Athletica’s stock price gapped higher following the earnings announcement, reaching a high just shy of the $130 handle.  Momentum has slowed somewhat, yet the technicals remain supportive as the stock trades within a rising up channel and has held above it’s 20-day moving average.

If you agree there’s further upside ahead for LULU, 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 LULU 27JUL18 120 Puts (LULU180727P120)
Sell To Open LULU 27JUL18 124 Puts (LULU180727P124) for a credit of $1.48 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when LULU was trading near $124.  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 $145.50 and your broker would charge a $400 maintenance fee, making your investment $254.50 ($400 – $145.50).  If LULU closes at any price above $124 on July 27, both options would expire worthless, and your return on the spread would be 57% (650% 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 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

Has The Tide Turned in Paycom Software (PAYC)?

Investor’s Business Daily, the website belonging to the creators of the IBD Top 50 list, named PAYC their IBD Stock of the Day on Friday.  Take a look at the article here for the reason behind the choice.  As well, an article published on The Motley Fool explains why Paycom Software is one of three stocks the analyst just added to his retirement portfolio.

After consolidating lower within a correction for about a month or so, PAYC has turned decisively higher, crossing above an important barrier.  Two prior attempts since May at the horizontal resistance level near $110 resulted in a notable correction, however, the stock managed to climb above it last week to signal that bulls may be retaking control.  The level has been significant since April, acting as both support and resistance.  In addition to the horizontal level, the stock has comfortably regained its 20-day moving average and trades near 52-week highs.

*source Tradingview.com

If you agree there’s further upside ahead for PAYC, 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 PAYC 20JUL18 105 Puts (PAYC180720P105)
Sell To Open PAYC 20JUL18 110 Puts (PAYC180720P110) for a credit of $1.33 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when PAYC was trading near $112.  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 PAYC closes at any price above $110 on July 20, 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

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 Terry’s Tips portfolio that trades these weekly suggestions has now gained 106% for the first six months of 2018.  We have declared a 2-for-1 split so new followers can get in for about $5000 where it started out the year instead of the $10,311 it is worth today after paying all commissions.  Paying Terry’s Tips subscribers can follow these trades on their own or have positions automatically put into their account through the Auto-Trade service offered by thinkorswim.

Terry

Kemet Corporation (KEM) Poised to Retest 52-Week High

Kemet stock has rallied since its earnings report in late May and these two articles suggest the stock price could continue higher –  Keep eye on 52-week high price – Kemet Corporation and Is the options market predicting a spike in Kemet stock?

KEM rose above a significant level last week, suggesting that bulls are firmly in control.  The horizontal level resides at $21.20 and served as a barrier on two attempts earlier this year, with each prior attempt resulting in a correction lower below $18.  The stock now trades at a fresh high for the year with sights on the 52-week high near $27.

*source Tradingview.com

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

Buy To Open KEM 20JUL18 20 Puts (KEM180720P20)
Sell To Open KEM 20JUL18 23 Puts (KEM180720P23) for a credit of $0.92 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when KEM was trading near $23.  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 $89.50 and your broker would charge a $300 maintenance fee, making your investment $210.50 ($300 – $ 89.50).  If KEM closes at any price above $23 on July 20, both options would expire worthless, and your return on the spread would be 43% (413% 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 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 Terry’s Tips  portfolio that places trades that you read about here has gained 99.7% so far in 2018.  That’s pretty close to doubling our money in less than six months, and all the paying Terry’s Tips subscribers who are following that portfolio, either on their own or through the free Auto-Trade service offered by thinkorswim are happy campers right now.

Terry

Grubhub (GRUB) Offers An Attractive Entry Point

Grubhub’s stock price recently broke higher and several analysts expect the upside momentum to continue.  This article published on Benzinga includes a target that suggests about a 20% upside.  A detailed article outlining why there could be more upside in GRUB was also published on InvestorPlace.  While the second article has a bit more of a conservative target, it still points to a potential 10% gain in the stock price.

The GRUB technical chart is signaling a bullish continuation.  The stock price broke out from a bullish flag pattern in early May and has more recently cleared above a clear horizontal resistance level found near $105.  The same level should protect any corrections for bulls to remain in control.  The stock price has also consistently traded above its 20-day moving average since the bull flag was activated.

*source Tradingview.com

If you agree there’s further upside ahead for GRUB, 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 GRUB 29JUN18 105 Puts (GRUB180629P105)
Sell To Open GRUB 29JUN18 107 Puts (GRUB180629P107) for a credit of $0.83 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when GRUB was trading near $108.  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 $80.50 and your broker would charge a $200 maintenance fee, making your investment $119.50 ($200 – $80.50).  If GRUB closes at any price above $107 on June 29, both options would expire worthless, and your return on the spread would be 67% (978% 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