Archive for the ‘10K Strategies’ Category
Sunday, May 12th, 2019
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
Tags: Auto-Trade, Bull Put Credit Spread, Bullish Options strategies, Calls, Credit Spreads, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Risk, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Weekly Options, WH
Posted in 10K Strategies, Credit Spreads, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Monday, May 6th, 2019
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
Tags: Auto-Trade, Bull Put Credit Spread, Bullish Options strategies, Calls, Credit Spreads, Monthly Options, Options Tutorial Program, Portfolio, profits, Puts, Risk, Stocks vs. Stock Options, Terry's Tips, thinkorswim, TWTR, Weekly Options
Posted in 10K Strategies, Credit Spreads, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Monday, April 22nd, 2019
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
Will Lululemon Athletica (LULU) Continue to Gain After Breaking to a Record High?
LULU has posted some impressive gains as of late and these two analysts see more upside – Why Lululemon’s Digital Business Is So Profitable and 3 Top Stocks to Buy for the Week.
The stock gapped up after their earnings report in late March, breaking to a fresh record high. Since then, LULU has essentially traded sideways with dips to horizontal support near $164 bought up. The horizontal level is quite significant as it represents resistance that held the stock lower last year. More support is found from the 20-day moving average which is seen converging towards the horizontal level.
LULU Chart April 2019
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 six weeks, at least a little.
Buy To Open LULU 31MAY19 167.50 Puts (LULU190531P167.50)
Sell To Open LULU 31MAY19 170 Puts (LULU190531P170) for a credit of $0.80 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when LULU was trading near $169. 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 $77.50 and your broker would charge a $250 maintenance fee, making your investment $172.50 ($250 – $77.50). If LULU closes at any price above $170 on May 31, both options would expire worthless, and your return on the spread would be 45% (421% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates April 18, 2019
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
Tags: Auto-Trade, Bull Put Credit Spread, Bullish Options strategies, Credit Spreads, LULU, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Weekly Options
Posted in 10K Strategies, Credit Spreads, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Monday, April 15th, 2019
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 portfolio at Terry’s Tips which trades these weekly ideas has gained 220% so far in 2019. Of course, we don’t expect this kind of success to persist, but so far we feel quite good about our chances.
By the way, we have another actual portfolio which trades an entirely different idea each week (one based on dividend payments), and it has notched 11 consecutive gains with nary a loss. In this portfolio, spreads are almost always closed out in one week after placing them.
Terry
Will Ulta Beauty (ULTA) Continue Higher Following the Impressive Rally?
ULTA is already up a significant amount this year and these two analysts still expect further upside – Despite Rising 50%, Ulta Beauty Is Still A Buy and Ulta Up 10.3% Since Last Earnings Report: Can It Continue?
The stock is seen consolidating sideways over the past few weeks and was last seen testing a confluence of support. The support area consists of prior resistance that followed the earnings-inspired gap up in the middle of March as well as the 20-day moving average. In the event the stock dips below this support confluence, further support is seen from the lower bound of a rising trend channel that originates from a low posted near the end of December.
ULTA Chart April 2019
If you agree there’s further upside ahead for ULTA, 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 ULTA 24MAY19 342.5 Puts (ULTA190524P342.5)
Sell To Open ULTA 24MAY19 345 Puts (ULTA190524P345) for a credit of $1.14 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when ULTA was trading near $345. 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 $111.50 and your broker would charge a $250 maintenance fee, making your investment $138.50 ($250 – $111.50). If ULTA closes at any price above $345 on May 24, both options would expire worthless, and your return on the spread would be 81% (758% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates April 11, 2019
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
Tags: Auto-Trade, Bullish Options strategies, Credit Spreads, Monthly Options, Options Tutorial Program, Profit, profits, Puts, Risk, SPY, Stocks vs. Stock Options, Terry's Tips, thinkorswim, ULTA, Weekly Options
Posted in 10K Strategies, Credit Spreads, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Sunday, March 31st, 2019
Dear {firstname) –
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 Five Below (FIVE) Maintain The Earnings Inspired Momentum?
Several analysts are expecting further upside for FIVE, here are two of them – Five Below (FIVE) PT Raised to $145 and Five Below (FIVE) PT Raised to $135 at Buckingham Research.
FIVE broke higher following their earnings report in the past week, scaling above the 50-day moving average. The indicator is now seen as support and carries some confluence as a horizontal level at $121 as well as a rising trendline originating from December lows are within close proximity.
If you agree there’s further upside ahead for FIVE, 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 FIVE 3MAY19 121 Puts (FIVE19053P121)
Sell To Open FIVE 3MAY19 124 Puts (FIVE19053P124) for a credit of $1.15 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when FIVE 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 $112.50 and your broker would charge a $300 maintenance fee, making your investment $187.50 ($300 – $112.50). If FIVE closes at any price above $124 on May 3, both options would expire worthless, and your return on the spread would be 60% (684% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates March 28, 2019
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
Tags: Auto-Trade, Bull Put Credit Spread, Bullish Options strategies, FIVE, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Weekly Options
Posted in 10K Strategies, Credit Spreads, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Sunday, March 24th, 2019
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 Amazon.com (AMZN) Following the Technical Breakout
AMZN recently made a significant technical break that stands to have bullish repercussions, take a look at what these two analysts have to say about it – Amazon’s Breakout May Fuel A Return To Its All-Time Highs and Amazon Stock Is Finally Breaking Out.
There are several ways to view the AMZN breakout, the above two articles include several of the variations. The one technical break that most are probably watching is the push above the stocks 200 daily moving average. The below chart shows that price stalled out near it three times this year prior to the technical break last week. A declining trendline originating from a high posted in October is also in play. In the current pullback, strong support is seen at the moving average followed by the previously broken descending trendline which is found slightly below the indicator.
AMZN Chart March 2019
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 26APR19 1760 Puts (AMZN190426P1760)
Sell To Open AMZN 26APR19 1762.5 Puts (AMZN190426P1762.5) for a credit of $0.98 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when AMZN was trading near $1765. 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 AMZN closes at any price above $1762.5 on April 26, 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 March 21, 2019
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
Tags: AMZN, Auto-Trade, Bull Put Credit Spread, Bullish Options strategies, Credit Spreads, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, SPY, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Weekly Options
Posted in 10K Strategies, Credit Spreads, Earnings Announcement Options Strategy, Greeks, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Sunday, March 17th, 2019
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 Terry’s Tips actual portfolio that trades these ideas has gained 164% so far in 2019. As always, future results can’t be assured to be as good, but we are pleased with the results so far.
Terry
Will MasTec’s (MTZ) Growth Prospects Keep the Stock Bid?
MasTec’s recent earnings report exceeded expectations and several analysts believe growth trends will continue, here are two of them – MasTec’s 2018 Results: A Lot to Like Here and Will MasTec Earnings Grow Over The Next Year?
Although a daily chart is displayed below, the strongest technical indicator for MTZ is seen on a weekly chart where the stock regained it’s 100 moving average on a sustained basis. The daily chart confirms the uptrend as the stock is held within a rising trend channel. The stock has held above a horizontal level at $47.30 in recent sessions, this is a level that was well respected resistance for most of 2018 on several attempts. Further support in the event of a dip lower is seen near $45.55 where a horizontal level is found as well as the 20-day moving average.
MZT Chart March 2019
*source Tradingview.com
If you agree there’s further upside ahead for MZT, 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 MZT 18APR19 44 Puts (MZT190418P44)
Sell To Open MZT 18APR19 47 Puts (MZT190418P47) for a credit of $0.85 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when MZT was trading near $48. 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 $82.50 and your broker would charge a $300 maintenance fee, making your investment $217.50 ($300 – $82.50). If MZT closes at any price above $47 on April 18, both options would expire worthless, and your return on the spread would be 38% (433% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates March 14, 2019
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
Tags: Auto-Trade, Bull Put Credit Spread, Bullish Options strategies, Calls, Credit Spreads, Monthly Options, MZT, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Weekly Options
Posted in 10K Strategies, Credit Spreads, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Sunday, March 10th, 2019
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
MGM Growth Properties (MGP) Dips Lower, Is It A Buy?
Several analysts think MGM Growth Properties has a lot more upside, here are two of them – A Careful Analysis of MGM Growth Properties and MGM Growth Properties On The Radar of Prospective Investors.
MGP is seen pulling back after testing resistance from a trendline drawn by connecting a high from late 2017 with the high from last year. Momentum indicators show no reason to believe a triple top is playing out and candlestick patterns on the higher time frames point to strength in recent upward momentum. The stock is currently testing its 200-day moving average which could be a spot where bulls might look to reenter.
MGP Chart March 2019
*source Tradingview.com
If you agree there’s further upside ahead for MGP, 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 MGP 18APR19 25 Puts (MGP190418P25)
Sell To Open MGP 18APR19 30 Puts (MGP190418P30) for a credit of $1.18 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when MGP was trading near $30. 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 $115.50 and your broker would charge a $500 maintenance fee, making your investment $384.50 ($500 – $115.50). If MGP closes at any price above $30 on April 18, both options would expire worthless, and your return on the spread would be 30% (281% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates March 7, 2019
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
Tags: Auto-Trade, Bull Put Credit Spread, Bullish Options strategies, Calendar Spreads, Calls, Credit Spreads, MGP, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Volatility, Weekly Options
Posted in 10K Strategies, Credit Spreads, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Sunday, March 3rd, 2019
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 which trades these weekly trade ideas has gained 157% so far in 2019, by far surpassing our other portfolios which have enjoyed average gains of 19% for the first two months of the year. Of course, past results can’t always be replicated in the future, but we are pleased with the results so far this year.
Terry
American Tower Corp (AMT) Rallies to Record Highs, What’s Next?
Several analysts remain bullish AMT following their earnings report in the past week, here are two of them – American Tower Delivers High-Speed Growth in Q4 and Gearing for a bull run? American Tower Corp Moves 7.42% For The Quarter.
AMT has been rising within an ascending trend channel that dates back to a low printed in late December. The price action surrounding the earnings report suggests that bulls remain in control. The stock was volatile on the earnings date, rising about 2% initially but then reversing sharply to end lower on the day. However, a rally the following day after testing the lower bound of the trend channel saw the price break to a record high, fully erasing the earnings-inspired drop. The technical outlook points to the potential of a rally towards the top of the rising trend channel.
*source Tradingview.com
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 not decline very much.
Buy To Open AMT 05APR19 175 Puts (AMT190405P175)
Sell To Open AMT 05APR19 177.5 Puts (AMT190405P177.5) for a credit of $0.85 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when AMT was trading near $178. 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 $82.50 and your broker would charge a $250 maintenance fee, making your investment $167.50 ($250 – $82.50). If AMT closes at any price above $177.5 on April 05, both options would expire worthless, and your return on the spread would be 49% (559% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates February 28, 2019
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
Tags: AMT, Auto-Trade, Bull Put Credit Spread, Bullish Options strategies, Calls, Credit Spreads, Monthly Options, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Weekly Options
Posted in 10K Strategies, Credit Spreads, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Tuesday, February 19th, 2019
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 portfolio carried out at Terry’s Tips which trades these spreads has gained 134% in the first six weeks of 2019, making it our most profitable portfolio so far this year. (It also gained over 100% in 2018.) Of course, past results can’t be guaranteed to repeat themselves, but we do feel pretty good about these kinds of spreads, at least when the overall market is moving higher.
Terry
Monolithic Power Systems (MPWR) Marches Higher Following Their Earnings Report
Monolithic Power Systems’ stock price has risen steadily since bottoming in late December and several analysts expect more upside, take a look at these two articles to see what the appeal is – Don’t Miss This Stock: Monolithic Power Systems and ROE & Quant Signals Under the Lens For Monolithic Power Systems.
MPWR has made some important technical breaks over the past few weeks to reaffirm its bullish trend. First was a sustained push back above the 200-day moving average. Second was when it climbed over a horizontal level near $132 that has been well respected since last summer as both support and resistance. The significance of this level can be seen on a daily chart but perhaps more clearly on a weekly chart. In the past week the stock made a determined push above the level, taking out the November high at the same time to trade at a fresh 5-month high. A hurdle is seen around $142 and a break of the level would suggest MPWR is headed for record highs.
MPWR Chart February 2019
*source Tradingview.com
If you agree there’s further upside ahead for MPWR, consider this trade which is a bet that the stock will continue to advance over the next four weeks, or at least not decline very much.
Buy To Open MPWR 15MAR19 130 Puts (MPWR190315P130)
Sell To Open MPWR 15MAR19 135 Puts (MPWR190315P135) for a credit of $1.23 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when MPWR was trading near $138. 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 $120.50 and your broker would charge a $500 maintenance fee, making your investment $379.50 ($500 – $120.50). If MPWR closes at any price above $135 on March 15, both options would expire worthless, and your return on the spread would be 32% (467% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates February 14, 2019
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
Tags: Auto-Trade, Bearish Options Strategies, Bull Put Credit Spread, Bullish Options strategies, Calls, Credit Spreads, Monthly Options, MPWR, Options Tutorial Program, Portfolio, Profit, profits, Risk, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Weekly Options
Posted in 10K Strategies, Credit Spreads, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
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