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Archive for July, 2018

Should You Buy the PayPal (PYPL) Earnings Dip?

Monday, July 30th, 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

Should You Buy the PayPal (PYPL) Earnings Dip?

PayPal recently reported earnings and this Zack’s article outlines why the stock price dipped despite beating estimates.  Also, an author on Seeking Alpha outlines why the decline following earnings can be viewed as a merely a speed bump in the broader bullish trend.

PYPL did close earlier on the day after the earnings announcement, however, the bulk of last week’s decline took place on Friday as the markets reacted to US GDP figures and weak earnings in other technology stocks.  This left PayPal stock at a major support confluence to end the week.  The confluence consists of a horizontal level at 85.45 which was major resistance in the first quarter now turned to support, as well as the lower bound of a rising trend channel that originates from a low posted in early May.  Although there was some momentum behind Friday’s decline, recent price action has not altered the bullish technical outlook for PYPL.

PYPL Chart July 2018

PYPL Chart July 2018

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

Buy To Open PYPL 31AUG18 83 Puts (PYPL180831P83)
Sell To Open PYPL 31AUG18 85.5 Puts (PYPL180831P85.5) for a credit of $0.98 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when PYPL was trading near $85.50.  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 PYPL closes at any price above $85.50 on August 31, both options would expire worthless, and your return on the spread would be 62% (707% annualized).

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

IBD Underlying Updates July 26, 2018

IBD Underlying Updates July 26, 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

Can Adobe Systems Continue the Upside Momentum?

Sunday, July 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 options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Terry

Can Adobe Systems Continue the Upside Momentum?

ADBE has posted impressive gains in the year thus far, and several analysts believe there is further upside.  Here are two of them – Why Adobe Systems Stock Has Jumped 39% So Far in 2018 and 4 impressive Liquid Stocks for Marvelous Returns.

Adobe Systems stock price has one of the strongest trends among the stocks listed on the IBD Top 50 list.  The stock has been trading within a rising trend channel for the year thus far and dips have been short-lived.  ADBE turned higher from a correction in late June and is seen currently on the verge of breaking to fresh record highs.  Strong downside support is seen ahead of the channel bottom at the 20-day moving average which currently confluences with the psychological $250 level.

ADBE Chart July 2018

ADBE Chart July 2018

If you agree there’s further upside ahead for ADBE, 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 ADBE 31AUG18 255 Puts (ADBE180831P255)
Sell To Open ADBE 31AUG18 257.5 Puts (ADBE180831P257.5) for a credit of $1.05 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when ADBE was trading near $257.  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 $102.50 and your broker would charge a $250 maintenance fee, making your investment $147.50 ($250 – $102.50).  If ADBE closes at any price above $257.50 on August 31, both options would expire worthless, and your return on the spread would be 69% (646% annualized).

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

IBD Underlying Updates July 19, 2018

IBD Underlying Updates July 19, 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

Palo Alto Networks (PANW) Breaks to Record Highs, What’s Next?

Sunday, July 15th, 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

Palo Alto Networks (PANW) Breaks to Record Highs, What’s Next?

Palo Alto Networks has seen a remarkable rise in its stock price over the last few years and several articles on The Motley Fool suggest there will be further upside.  Here are the latest two – Palo Alto Networks’ Bull Run Probably Won’t Be Ending Anytime Soon and Forget Cryptocurrencies: You’re Better Off Buying These 3 Stocks.

On a daily chart, PANW appears to be consolidating in a range since around the middle of May.  However, a closer look reveals a notable technical break.  Range support near $200 wasn’t just important because of the psychological implications, the level also triggered a sharp turn in 2015 that led to a two-year correction.  Although there have been marginal breaches below the level since the stock price initially climbed above it a few months ago, bears have been unable to drive the stock price below it on a sustained basis.  To the upside, resistance near $216 had capped rallies in June but the recent bullish break of the level suggests the uptrend has resumed.

PANW Chart July 2018

PANW Chart July 2018

*source Tradingview.com

If you agree there’s further upside ahead for PANW, 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 PANW 24AUG18 212.5 Puts (PANW180824P212.5)
Sell To Open PANW 24AUG18 215 Puts (PANW180824P215) for a credit of $0.95 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when PANW was trading near $216.  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 $92.50 and your broker would charge a $250 maintenance fee, making your investment $157.50 ($250 – $92.50).  If PANW closes at any price above $215 on August 24, both options would expire worthless, and your return on the spread would be 59% (552% annualized).

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

IBD Underlying Updates July 12, 2018

IBD Underlying Updates July 12, 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

Micron Technology (MU) Dips To Support, Is It a Buy?

Sunday, July 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 options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Terry

Micron Technology (MU) Dips To Support, Is It a Buy?

Micron Technology stock has been impacted by negative headline news as of late but these following two articles make a strong case for why this news is not likely to cause bearish pressure for the stock price moving forward.  Micron’s China Woes May Not Be the Disaster Investors Thought and Micron Technology is rebounding after saying China ban will have minimal impact.

MU has been correcting lower since the end of May but is seen trading near an important technical inflection point, and has already shown signs of buyer’s protecting the area.  The support area is derived from a rising trendline that originates back to a low printed in August last year as well as a horizontal level at $49.62.  The rising trendline last triggered a bounce in May which led to a break to record highs.  The horizontal level carries psychological properties as it falls near $50.  The level acted as major resistance in late 2017 and is now seen as support.

MU Chart July 2018

MU Chart July 2018

*source Tradingview.com

If you agree there’s further upside ahead for MU, 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 MU 17AUG18 50 Puts (MU180817P50)
Sell To Open MU 17AUG18 52.5 Puts (MU180817P52.5) for a credit of $0.98 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when MU was trading near $53.  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 MU closes at any price above $52.50 on August 17, both options would expire worthless, and your return on the spread would be 62% (580% annualized).

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

IBD Underlying Updates July 5, 2018

IBD Underlying Updates July 5, 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

Consider Integrated Device Technology (IDTI) Following the Correction

Sunday, July 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

Consider Integrated Device Technology (IDTI) Following the Correction

Several analysts are expecting further upside for Integrated Device Technology, here are two of them – What the market is missing about Integrated Device Technology and Two worthy stocks for investors: Hovnanian Enterprises, Integrated Device Technology.

IDTI Chart June 2018

IDTI Chart June 2018

IDTI has been correcting lower over the past two weeks and is now seen trading at some important technical support.  Specifically, the stock is seen bouncing from a horizontal level residing at $31.30.  This level was notably important through several gaps that took place in late 2017 and earlier this year.  As well, the stock price is near the 200-day moving average, an indicator it has not traded below on a sustained basis in about two years.

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

Buy To Open IDTI 20JUL18 29 Puts (IDTI180720P29)
Sell To Open IDTI 20JUL18 32 Puts (IDTI180720P32) for a credit of $0.69 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when IDTI was trading near $32.  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 $66.50 and your broker would charge a $300 maintenance fee, making your investment $233.50 ($300 – $66.50).  If IDTI closes at any price above $32 on July 20, both options would expire worthless, and your return on the spread would be 28% (568% annualized).

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

IBD Underlying Updates June 28, 2018

IBD Underlying Updates June 28, 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

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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.

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