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Archive for the ‘10K Strategies’ Category

Can ADBE (ABDE) Hold Above the $500 Price Point?

Monday, October 19th, 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.

ADBE has doubled from its March low and the following two articles lay out reasons why the stock may continue to gain. One of them even makes a case that the stock is undervalued at current levels, despite to impressive rally as of late – Adobe’s Stock To Continue Growing? and Adobe (ADBE) Up 6.4% Since Last Earnings Report: Can It Continue?

Technicals

After correcting lower last month, ADBE is starting to once again show signs of upward momentum. The stock has posted a series of higher highs and higher lows over the last four weeks as it oscillates higher in a rising trend channel. Buyers have defended the lower line of the channel as well as dips towards the 20-Day moving average. Further, a break above the $500 level earlier this month is a sign of strength. Strong near-term support is seen in the $492-$500 area.

ADBE Chart October 2020 above $500

ADBE Chart October 2020

If you agree there’s further upside ahead for ADBE, consider this trade which relies on the stock remaining above the $500 level through the expiration in five weeks.

Buy To Open ADBE 20NOV20 495 Puts (ADBE201120P495)
Sell To Open ADBE 20NOV20 500 Puts (ADBE201120P500) for a credit of $2.08 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when ADBE was trading near $503.  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 $206.70. This reduces your buying power by $500 and makes your investment $293.30 ($500 – $206.70).  If ADBE closes at any price above $500 on November 20, both options will expire worthless, and your return on the spread would be 70% ($206.70 / $293.30), or 798% annualized.

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

IBD Underlying Updates October 17, 2020

IBD Underlying Updates October 17, 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

Lowe’s (LOW) Boosted by Rise in Home Improvement Spending

Monday, October 12th, 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.

LOW has posted stellar gains in the year thus far. The following two articles discuss what drove the surge since late March as well as reasons why the momentum could continue – Lowe’s Stock Can Keep Rallying Because People Will Be Spending More Time at Home for Longer and 3 Reasons Why Lowe’s (LOW) Is a Great Growth Stock.

Technicals

From a technical standpoint, LOW has broken higher from an ascending triangle which is a bullish continuation pattern. Support for near-term dips falls at $170.50 which marks the top of the triangle. LOW is up 45% year to date and is one of only a few stocks on the IBD Top 50 list that has broken to a record high in October.

LOW Chart October 2020 bullish continuation pattern

LOW Chart October 2020

If you agree there’s further upside ahead for LOW, consider this trade which relies on the stock remaining above the $172.50 level through the expiration in five weeks.

Buy To Open LOW 13NOV20 170 Puts (LOW201113P170)
Sell To Open LOW 13NOV20 172.5 Puts (LOW201113P172.5) for a credit of $1.13 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when LOW was trading near $173.  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 $111.70. This reduces your buying power by $250 and makes your investment $138.30 ($250 – $111.70).  If LOW closes at any price above $172.50 on November 13, both options will expire worthless, and your return on the spread would be 81% ($111.70 / $138.30), or 924% annualized.

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

IBD Underlying Updates October 10, 2020

IBD Underlying Updates October 10, 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

DR Horton (DHI) Powers to Record High

Monday, October 5th, 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.

DHI is an outperformer in the markets. The stock closed at an all-time high in the past week while the S&P 500 would need to rally another 7% to achieve the same milestone. Check out what the following two analysts have to say about the stock – D.R. Horton (DHI) Gains As Market Dips: What You Should Know and D.R. Horton, LGI Homes In Buy Range, Lowe’s Sets Up As Coronavirus Fuels Housing Stocks

Technicals

DHI has posted gains in the last six straight months and shows renewed upward momentum after breaking above the August top. The stock was held lower by horizontal resistance at $75.60 in September and this same price point is now seen as downside support. There is also a rising trendline in play that shows further support in the $74-$74.50 range. Back in June, DHI hovered around its 20-day moving average for about a month before continuing the upward momentum. A similar pattern could be playing out now as the stock spent most of September consolidating around its 20 DMA.

DHI Chart October 2020 rising trend

DHI Chart October 2020

If you agree there’s further upside ahead for DHI, consider this trade which relies on the stock remaining above $77.50 level through the expiry in five weeks.

Buy To Open DHI 06NOV20 75 Puts (DHI201106P75)
Sell To Open DHI 06NOV20 77.5 Puts (DHI201106P77.5) for a credit of $0.89 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when DHI was trading near $78.  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 $87.70. This reduces your buying power by $250 and makes your investment $162.30 ($250 – $87.70).  If DHI closes at any price above $77.50 on November 06, both options will expire worthless, and your return on the spread would be 54% ($87.70 / $162.30), or 616% annualized.

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

IBD Underlying Updates October 3, 2020

IBD Underlying Updates October 3, 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

Intuit (INTU) Chart Signals Buying Opportunity

Monday, September 28th, 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.

INTU looks appealing from both a technical and fundamental perspective. The following two articles discuss why investors might be drawn to the stock from the fundamental side of things – Here is Why Growth Investors Should Buy Intuit (INTU) Now and Here’s Why I Think Intuit Is An Interesting Stock.

Technicals

On the technical side, INTU trades near an important confluence of support, and recent price action suggests that buyers are willing to defend it. Support for INTU comes from its 100-day moving average as well as a horizontal level at $305. This price point previously acted as resistance back in February when the markets broadly turned lower. Further, on the larger time frames, INTU tested its 20-week moving average in the past week. There was a strong rally from the indicator which has led to a bullish reversal candlestick formation on a weekly chart.

INTU Chart September 2020 - strong rally

INTU Chart September 2020

If you agree there’s further upside ahead for INTU, consider this trade which relies on the stock remaining above $317.50 through the expiration in five weeks.

Buy To Open INTU 30OCT20 315 Puts (INTU201030P315)
Sell To Open INTU 30OCT20 317.5 Puts (INTU201030P317.5) for a credit of $1.03 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when INTU was trading near $318.50.  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 $101.70. This reduces your buying power by $250 and makes your investment $148.30 ($250 – $101.70).  If INTU closes at any price above $317.50 on October 30, both options will expire worthless, and your return on the spread would be 69% ($101.70 / $148.30), or 787% annualized.

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

IBD Underlying Updates September 26, 2020

IBD Underlying Updates September 26, 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

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

Will Bristol-Myers Squibb (BMY) Continue the Upward Momentum?

Monday, August 17th, 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.

BMY is up nearly 40% from its low in March and several analysts expect it will continue to push higher. Check out the following article that discusses a potential 10% upside – Analysts Are Bullish on Top Healthcare Stocks: Pfenex (PFNX), Bristol Myers (BMY).  Also, take a look at why BMY might be appealing to growth investors – 3 Reasons Why Growth Investors Shouldn’t Overlook Bristol Myers (BMY).

Technicals

After a correction lower that started in May, BMY is showing signs that the uptrend has resumed. The stock has rallied above its 200-day moving average as well as a horizontal price point at $60. The moving average and horizontal level are now seen as strong support on the downside. Ahead of it, an additional support level is seen at $61.75. BMY is outperforming several of the stocks on the IBD Top 50 list in the month thus far. The higher time-frame charts for this stock point to renewed upward momentum while many of the other stocks on the list have started to move sideways.

BMY Chart August 2020

BMY Chart August 2020

If you agree there’s further upside ahead for BMY, consider this trade is based on the stock continuing its advance over the next five weeks, or at least not declining very much.

Buy To Open BMY 18SEP20 60 Puts (BMY20918P60)
Sell To Open BMY 18SEP20 62.5 Puts (BMY20918P62.5) for a credit of $0.68 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when BMY was trading near $63.  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 $66.70 and your broker would charge a $250 maintenance fee, making your investment $183.30 ($250 – $66.70).  If BMY closes above $62.5 on September 18, both options would expire worthless, and your return on the spread would be 36% (411% annualized).

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

IBD Underlying Updates August 15, 2020

IBD Underlying Updates August 15, 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

Making 36%

Making 36% — A Duffer's Guide to Breaking Par in the Market Every Year in Good Years and Bad

This book may not improve your golf game, but it might change your financial situation so that you will have more time for the greens and fairways (and sometimes the woods).

Learn why Dr. Allen believes that the 10K Strategy is less risky than owning stocks or mutual funds, and why it is especially appropriate for your IRA.

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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