Archive for the ‘Credit Spreads’ Category
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 »
Sunday, February 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. Our actual portfolio carried out at Terry’s Tips which trades these weekly ideas has gained 114% in the first five weeks of 2019. This portfolio also made over 100% in 2018 and we withdrew the starting investment amount so that we are playing entirely with profits at this time. Of course, there is no certainty that we can duplicate this success in the future, but we feel pretty good about our prospects.
Terry
Can Microchip Technology (MCHP) Maintain its Post-Earnings Momentum?
Microchip Technology saw its stock price rally just over 10% prior to pulling back as investor optimism grew following their earnings report in the past week. Just to be clear, the report was not as upbeat as expected. Actually, the stock had turned down initially, but it was a prediction from the company Chief Executive that caused investors to change their view and start buying. It’s a rather interesting turn of events and the following two articles explain why the markets have put so much weight to his prediction, and why the stock may continue to rise from here – Microchip’s stock soars after CEO calls for a bottom, and he’s been right before and Microchip: A Bottom Is Possibly In.
The push higher following earnings led to a signifcant technical break as the stock was pressed against a confluence of resistance prior to it. Resistance comes from the 200-day moving average as well as a declining trendline drawn from the June top. The stock price has pulled back a bit from horizontal resistance found at $89.20 that was a prior low and prior resistance following a gap down last summer. Support is found just above $85. In the even the support level does not hold, stronger support is found at the prior breakout point. Considering the significance of the technical break, bulls are likely to defend any dips in the near-term.
MCHP Chart February 2019
*source Tradingview.com
If you agree there’s further upside ahead for MCHP, 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 MCHP 15MAR19 85.00 Puts (MCHP190315P85.00)
Sell To Open MCHP 15MAR19 87.50 Puts (MCHP190315P87.50) for a credit of $1.10 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when MCHP was trading near $87.50. 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 $355.50 and your broker would charge a $1000 maintenance fee, making your investment $644.50 ($1000 – $355.50). If MCHP closes at any price above $87.50 on March 15, both options would expire worthless, and your return on the spread would be 55% (627% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates February 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, Calls, Credit Spreads, MCHP, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, SPY, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Volatility, 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, February 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.
Terry
PayPal (PYPL) Dips After Earnings, Is it a Buy?
After briefly piercing to record highs, PayPal stock declined following its earnings report in the past week. Is the dip a buying opportunity? The following article provides some solid arguments for why it is – Buy the Dip in Paypal Stock Because $100 Is the Next Stop. Also an article recently published on The Motley Fool makes a compelling argument for growth on the back of rising popularity and potential for PayPal’s app Venmo. In the article, the company’s CEO was quoted as saying the P2P payment app could potentially surpass PayPal’s payment system in profitability – The Big News in PayPal’s Fourth-Quarter Update.
Aside from chart patterns, a significant appeal to PYPL is that it touched record highs this month, fully erasing the prior decline. Not only that, it was the first IBD Top 50 listed stock to do so while most have only recovered a part of the fall that took place late in 2018. In this context, it is certainly an outperformer. Support is found at $87.55 as a horizontal level there has previously acted as both support and resistance dating back to June last year. Note that this level was a major barrier in the fourth quarter. On a weekly chart, the 20-week moving average was the equivalent barrier for Q4. It currently falls near $85.50 to provide additional support in the event of further near-term downside. Just above it, the 50-day moving average is found, currently at $86.14.
PYPL Chartl February 2019
*source Tradingview.com
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 six weeks, or at least not decline very much.
Buy To Open PYPL 15MAR19 87.5 Puts (PYPL190315P87.5)
Sell To Open PYPL 15MAR19 90 Puts (PYPL190315P90) for a credit of $0.95 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when PYPL was trading near $90. 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 PYPL closes at any price above $90 on March 15, 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 February 1, 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, Monthly Options, Options Tutorial Program, Portfolio, Profit, Puts, PYPL, Risk, SPY, Stocks vs. Stock Options, Straddles, Strangles, Terry's Tips, thinkorswim, Volatility, Weekly Options
Posted in 10K Strategies, Credit Spreads, Earnings Announcement Options Strategy, Monthly Options, SPY, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Sunday, January 27th, 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
Is the Earnings Dip in Atlassian Corp (TEAM) A Buy Opportunity?
Atlassian is a well-liked stocked by several analysts, not only because of their business model but also the stock price performance. Look at what these two analysts are saying about the company – Software Stock Could Surge Into February and Analysts Hold Stances On Atlassian Following A ‘Ripper’ Of A Quarter.
TEAM turned higher alongside the broader markets in late December and briefly pierced to record highs following their recent earnings release, however, the stock closed about 10% lower after the report. The price action that follows is particularily important as it suggests that bulls remain well in control. First, the stock failed to make a sustained drop below it’s 20-day moving average. Also a rising trend channel remains intact and buyers defended the lower bound of the channel following the post-earnings dip. Lastly, on a weekly chart, TEAM closed at a weekly high for the year in the past week to further support the view that the earnings dip may have been a buying opportunity as opposed to a sell signal.
TEAM Chart January 2019
*source Tradingview.com
If you agree there’s further upside ahead for TEAM, consider this trade which is a bet that the stock will continue to advance over the next seven weeks, or at least not decline very much.
Buy To Open TEAM 15MAR19 90 Puts (TEAM190315P90)
Sell To Open TEAM 15MAR19 95 Puts (TEAM190315P95) for a credit of $1.93 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when TEAM was trading near $96. 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 $190.50 and your broker would charge a $500 maintenance fee, making your investment $309.50 ($500 – $190.50). If TEAM closes at any price above $95 on March 15, both options would expire worthless, and your return on the spread would be 62% (492% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates January 24, 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, Earnings Option Strategy, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, Straddles, Strangles, TEAM, Terry's Tips, thinkorswim, VIX, Weekly Options
Posted in 10K Strategies, Credit Spreads, Earnings Announcement Options Strategy, Monthly Options, SPY, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios | No Comments »
Sunday, January 20th, 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 Cadence Design Systems (CDNS) Following the Technical Breakout
Several analysts expect more upside from CDNS, here are two of them – Disney and 4 Other Stock Picks from a Parnassus Fund Manager and Why Should You Retain Cadence Stock in Your Portfolio?
CDNS is seeng breaking higher from a triangle pattern which signals a continuation of the broader uptrend, often with a pick up in upside momentum. In addition to the technical break, the stock is one of few on the IBD Top 50 List, and in the broader markets for that matter, that is on the verge of breaking to record highs.
CDNS Chart January 2019
*source Tradingview.com
If you agree there’s further upside ahead for CDNS, 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 CDNS 15FEB19 43 Puts (CDNS190215P43)
Sell To Open CDNS 15FEB19 46 Puts (CDNS190215P46) for a credit of $0.65 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when CDNS was trading near $47. 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 $62.50 and your broker would charge a $300 maintenance fee, making your investment $237.50 ($300 – $62.50). If CDNS closes at any price above $46 on February 15, both options would expire worthless, and your return on the spread would be 26% (380% annualized). Note: Options on CDNS are fairly illiquid, with large bid-ask spreads. It would be especially important to place a limit order rather than a market order here.
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates January 17, 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, CDNS, Credit Spreads, diagonal spreads, Earnings Option Strategy, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, Straddles, Strangles, Terry's Tips, thinkorswim, Weekly Options
Posted in 10K Strategies, Credit Spreads, Earnings Announcement Options Strategy, Monthly Options, SPY, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Sunday, January 13th, 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
Can CyberArk Software (CYBR) Continue the Upside Momentum?
The Investor’s Business Daily recently published an article picking out CYBR as one of the 5 best companies that stand to gain as the market rallies, view the full article here. As well, take a look at this article published on Zacks that details CYBR as an outperformer among its peers.
From a technical perspective, the main appeal to CyberArk’s stock is that it’s trading within a rising trend channel while a majority of stocks remain within a declining trend channel, which is an indication of strength. In fact, looking at the CYBR chart alone, it would not be apparent that the broader markets had such a volatile decline in the last two months of 2018. The stock price ended last week near highs and looks to be threatening a break above the December top.
CYBR Chart January 2019
*source Tradingview.com
If you agree there’s further upside ahead for CYBR, consider this trade which is a bet that the stock will continue to advance over the next four weeks, at least a little bit.
Buy To Open CYBR 8FEB19 75 Puts (CYBR19028P75)
Sell To Open CYBR 8FEB19 78 Puts (CYBR19028P78) for a credit of $1.33 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when CYBR 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 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 $300 maintenance fee, making your investment $169.50 ($300 – $130.50). If CYBR closes at any price above $78 on February 8, both options would expire worthless, and your return on the spread would be 77% (1124% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates January 10, 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, CYBR, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, SPY, Stocks vs. Stock Options, Straddles, Strangles, Terry's Tips, thinkorswim, Weekly Options
Posted in 10K Strategies, Credit Spreads, Earnings Announcement Options Strategy, Monthly Options, Stock Option Trading Idea Of The Week, Terry's Tips Portfolios, Weekly Options | No Comments »
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