Archive for the ‘Credit Spreads’ Category
Monday, August 13th, 2018
This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies. We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.
Terry
Match Group (MTCH) Surges to Record Highs, What’s Next?
Match Group broke to record highs in the past week and several analysts believe there is more upside, here are two of them – Match Group Is Still Undervalued and Wall Street is Falling in Love With Match Stock.
The main focus from a technical perspective is the upside momentum triggered by the recent earnings beat. MTCH climbed above major resistance that is found between $47.00 and $48.65 to trade to record highs. Recall that the stock traded in this resistance area ahead of the steep fall on news of Facebook launching a new dating service at the start of May. In the process of breaking to new highs, a succession of higher highs and lower highs has materialized from the May low. As often seen, the prior resistance area is now considered strong support, suggesting that dips in the stock will be short-lived.
MTCH Chart August 2018
*source Tradingview.com
If you agree there’s further upside ahead for MTCH, 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 MTCH 21SEP18 47 Puts (MTCH180821P47)
Sell To Open MTCH 21SEP18 50 Puts (MTCH180821P50) for a credit of $1.03 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when MTCH was trading near $51. 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 $100.50 and your broker would charge a $300 maintenance fee, making your investment $199.50 ($300 – $100.50). If MTCH closes at any price above $50 on September 21, both options would expire worthless, and your return on the spread would be 50% (468% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates August 9, 2018
We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run. Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.
As with all investments, you should only make option trades with money that you can truly afford to lose.
Happy trading,
Terry
Tags: Auto-Trade, Bullish Options strategies, Credit Spreads, Earnings Option Strategy, Monthly Options, MTCH, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, TastyWorks, 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, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Sunday, August 5th, 2018
This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies. We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.
Terry
Globus Medical (GMED) Offers an Appealing Entry Point
Several analysts are looking for more upside in GMED, take a look at these two analysts who have recently revised up their upside targets – Oppenheimer Analysts Give Globus Medical a $57.00 Price Target and Let’s Make Some Money With Globus Medical.
From a technical perspective, GMED is seen pulling back in the past few sessions to a well-respected horizontal level found at $52.35. The level has previously acted as both resistance and support, including during a gap down in June. In addition to the horizontal level, the 200-day moving average is in play and held the stock higher on a dip late in the week.
GMED Chart August 2018
*source Tradingview.com
If you agree there’s further upside ahead for GMED, 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 GMED 21SEP18 50 Puts (GMED180921P50)
Sell To Open GMED 21SEP18 52.5 Puts (GMED180921P52.5) for a credit of $0.89 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when GMED was trading near $52.50. 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 $86.50 and your broker would charge a $250 maintenance fee, making your investment $163.50 ($250 – $86.50). If GMED closes at any price above $52.50 on September 21, both options would expire worthless, and your return on the spread would be 53% (403% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates August 2, 2018
We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run. Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.
As with all investments, you should only make option trades with money that you can truly afford to lose.
Happy trading,
Terry
Tags: Auto-Trade, Bullish Options strategies, Credit Spreads, GMED, 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, Earnings Announcement Options Strategy, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Monday, July 30th, 2018
This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies. We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.
Terry
Should You Buy the PayPal (PYPL) Earnings Dip?
PayPal recently reported earnings and this Zack’s article outlines why the stock price dipped despite beating estimates. Also, an author on Seeking Alpha outlines why the decline following earnings can be viewed as a merely a speed bump in the broader bullish trend.
PYPL did close earlier on the day after the earnings announcement, however, the bulk of last week’s decline took place on Friday as the markets reacted to US GDP figures and weak earnings in other technology stocks. This left PayPal stock at a major support confluence to end the week. The confluence consists of a horizontal level at 85.45 which was major resistance in the first quarter now turned to support, as well as the lower bound of a rising trend channel that originates from a low posted in early May. Although there was some momentum behind Friday’s decline, recent price action has not altered the bullish technical outlook for PYPL.
PYPL Chart July 2018
If you agree there’s further upside ahead for PYPL, consider this trade which is a bet that the stock will continue to advance over the next five weeks, at least a little bit.
Buy To Open PYPL 31AUG18 83 Puts (PYPL180831P83)
Sell To Open PYPL 31AUG18 85.5 Puts (PYPL180831P85.5) for a credit of $0.98 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when PYPL was trading near $85.50. Unless the stock rallies quickly from here, you should be able to get close to this amount.
Your commission on this trade will only be $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers). Each contract would then yield $95.50 and your broker would charge a $250 maintenance fee, making your investment $154.50 ($250 – $95.50). If PYPL closes at any price above $85.50 on August 31, both options would expire worthless, and your return on the spread would be 62% (707% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates July 26, 2018
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, Earnings Option Strategy, Monthly Options, Portfolio, Profit, profits, Puts, PYPL, Risk, Stocks vs. Stock Options, TastyWorks, Terry's Tips, thinkorswim, Weekly Options
Posted in Credit Spreads, Earnings Announcement Options Strategy, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Sunday, July 22nd, 2018
This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies. We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.
Terry
Can Adobe Systems Continue the Upside Momentum?
ADBE has posted impressive gains in the year thus far, and several analysts believe there is further upside. Here are two of them – Why Adobe Systems Stock Has Jumped 39% So Far in 2018 and 4 impressive Liquid Stocks for Marvelous Returns.
Adobe Systems stock price has one of the strongest trends among the stocks listed on the IBD Top 50 list. The stock has been trading within a rising trend channel for the year thus far and dips have been short-lived. ADBE turned higher from a correction in late June and is seen currently on the verge of breaking to fresh record highs. Strong downside support is seen ahead of the channel bottom at the 20-day moving average which currently confluences with the psychological $250 level.
ADBE Chart July 2018
If you agree there’s further upside ahead for ADBE, consider this trade which is a bet that the stock will continue to advance over the next six weeks, or at least not decline very much.
Buy To Open ADBE 31AUG18 255 Puts (ADBE180831P255)
Sell To Open ADBE 31AUG18 257.5 Puts (ADBE180831P257.5) for a credit of $1.05 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when ADBE was trading near $257. Unless the stock rallies quickly from here, you should be able to get close to this amount.
Your commission on this trade will only be $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers). Each contract would then yield $102.50 and your broker would charge a $250 maintenance fee, making your investment $147.50 ($250 – $102.50). If ADBE closes at any price above $257.50 on August 31, both options would expire worthless, and your return on the spread would be 69% (646% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates July 19, 2018
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: ADBE, Auto-Trade, Bull Put Credit Spread, Credit Spreads, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, TastyWorks, Terry's Tips, thinkorswim, VIX, Weekly Options
Posted in 10K Strategies, Credit Spreads, Earnings Announcement Options Strategy, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Sunday, July 15th, 2018
This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies. We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.
Terry
Palo Alto Networks (PANW) Breaks to Record Highs, What’s Next?
Palo Alto Networks has seen a remarkable rise in its stock price over the last few years and several articles on The Motley Fool suggest there will be further upside. Here are the latest two – Palo Alto Networks’ Bull Run Probably Won’t Be Ending Anytime Soon and Forget Cryptocurrencies: You’re Better Off Buying These 3 Stocks.
On a daily chart, PANW appears to be consolidating in a range since around the middle of May. However, a closer look reveals a notable technical break. Range support near $200 wasn’t just important because of the psychological implications, the level also triggered a sharp turn in 2015 that led to a two-year correction. Although there have been marginal breaches below the level since the stock price initially climbed above it a few months ago, bears have been unable to drive the stock price below it on a sustained basis. To the upside, resistance near $216 had capped rallies in June but the recent bullish break of the level suggests the uptrend has resumed.
PANW Chart July 2018
*source Tradingview.com
If you agree there’s further upside ahead for PANW, consider this trade which is a bet that the stock will continue to advance over the next six weeks, or at least not decline very much.
Buy To Open PANW 24AUG18 212.5 Puts (PANW180824P212.5)
Sell To Open PANW 24AUG18 215 Puts (PANW180824P215) for a credit of $0.95 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when PANW was trading near $216. Unless the stock rallies quickly from here, you should be able to get close to this amount.
Your commission on this trade will only be $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers). Each contract would then yield $92.50 and your broker would charge a $250 maintenance fee, making your investment $157.50 ($250 – $92.50). If PANW closes at any price above $215 on August 24, both options would expire worthless, and your return on the spread would be 59% (552% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates July 12, 2018
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, Earnings Option Strategy, Monthly Options, PANW, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, TastyWorks, 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, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Sunday, July 8th, 2018
This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies. We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.
Terry
Micron Technology (MU) Dips To Support, Is It a Buy?
Micron Technology stock has been impacted by negative headline news as of late but these following two articles make a strong case for why this news is not likely to cause bearish pressure for the stock price moving forward. Micron’s China Woes May Not Be the Disaster Investors Thought and Micron Technology is rebounding after saying China ban will have minimal impact.
MU has been correcting lower since the end of May but is seen trading near an important technical inflection point, and has already shown signs of buyer’s protecting the area. The support area is derived from a rising trendline that originates back to a low printed in August last year as well as a horizontal level at $49.62. The rising trendline last triggered a bounce in May which led to a break to record highs. The horizontal level carries psychological properties as it falls near $50. The level acted as major resistance in late 2017 and is now seen as support.
MU Chart July 2018
*source Tradingview.com
If you agree there’s further upside ahead for MU, consider this trade which is a bet that the stock will continue to advance over the next six weeks, or at least not decline very much.
Buy To Open MU 17AUG18 50 Puts (MU180817P50)
Sell To Open MU 17AUG18 52.5 Puts (MU180817P52.5) for a credit of $0.98 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when MU was trading near $53. Unless the stock rallies quickly from here, you should be able to get close to this amount.
Your commission on this trade will only be $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers). Each contract would then yield $95.50 and your broker would charge a $250 maintenance fee, making your investment $154.50 ($250 – $95.50). If MU closes at any price above $52.50 on August 17, both options would expire worthless, and your return on the spread would be 62% (580% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates July 5, 2018
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, diagonal spreads, Earnings Option Strategy, Monthly Options, MU, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, TastyWorks, 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, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Sunday, July 1st, 2018
This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies. We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.
Terry
Consider Integrated Device Technology (IDTI) Following the Correction
Several analysts are expecting further upside for Integrated Device Technology, here are two of them – What the market is missing about Integrated Device Technology and Two worthy stocks for investors: Hovnanian Enterprises, Integrated Device Technology.
IDTI Chart June 2018
IDTI has been correcting lower over the past two weeks and is now seen trading at some important technical support. Specifically, the stock is seen bouncing from a horizontal level residing at $31.30. This level was notably important through several gaps that took place in late 2017 and earlier this year. As well, the stock price is near the 200-day moving average, an indicator it has not traded below on a sustained basis in about two years.
If you agree there’s further upside ahead for IDTI, consider this trade which is a bet that the stock will continue to advance over the next three weeks, at least a little bit.
Buy To Open IDTI 20JUL18 29 Puts (IDTI180720P29)
Sell To Open IDTI 20JUL18 32 Puts (IDTI180720P32) for a credit of $0.69 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when IDTI was trading near $32. Unless the stock rallies quickly from here, you should be able to get close to this amount.
Your commission on this trade will only be $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers). Each contract would then yield $66.50 and your broker would charge a $300 maintenance fee, making your investment $233.50 ($300 – $66.50). If IDTI closes at any price above $32 on July 20, both options would expire worthless, and your return on the spread would be 28% (568% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates June 28, 2018
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, IDTI, Monthly Options, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, TastyWorks, Terry's Tips, thinkorswim, Weekly Options
Posted in Credit Spreads, Earnings Announcement Options Strategy, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Sunday, June 24th, 2018
This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies. We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.
I thought I might share with you the first paragraph of this week’s report to our paying subscribers – “Bad Week for the Market (Down 1%), But Our Composite Portfolio Average Gains 5% Thanks to Blow-Out Week for Wiley Wolf (up 47%): A week ago, we were celebrating a 26.5% gain in Wiley Wolf when FB gained 3.6%, but that was nothing compared to this week’s colossal 47.6% gain on a 3.0% rise in the stock. In two weeks, the portfolio has moved from a value of $4,472 to today’s $8,353. The 10K Strategy can deliver extraordinary results when you are leaning to the bullish side and the underlying cooperates by going up (which you expect it to do or you wouldn’t have selected that stock in the first place). Positive results from this strategy also appeared this week in Rising Tide where the portfolio gained 10% while the underlying MA rose 1%.”
I hope you enjoy this week’s trading idea.
Terry
Lululemon (LULU) Stock Price Surges Following Earnings
LULU rose to record highs earlier this month following its earnings report. Several analysts think the stock can go a lot higher, here are two of them – Was Lululemon Athletica Inc’s Earnings Growth Better Than The Industry’s? and 7 Debt-Free Companies Doing Big Stock Buybacks
Lululemon Athletica’s stock price gapped higher following the earnings announcement, reaching a high just shy of the $130 handle. Momentum has slowed somewhat, yet the technicals remain supportive as the stock trades within a rising up channel and has held above it’s 20-day moving average.
LULU Chart June 2018
If you agree there’s further upside ahead for LULU, consider this trade which is a bet that the stock will continue to advance over the next five weeks, or at least not decline very much.
Buy To Open LULU 27JUL18 120 Puts (LULU180727P120)
Sell To Open LULU 27JUL18 124 Puts (LULU180727P124) for a credit of $1.48 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when LULU was trading near $124. Unless the stock rallies quickly from here, you should be able to get close to this amount.
Your commission on this trade will only be $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers). Each contract would then yield $145.50 and your broker would charge a $400 maintenance fee, making your investment $254.50 ($400 – $145.50). If LULU closes at any price above $124 on July 27, both options would expire worthless, and your return on the spread would be 57% (650% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates June 21, 2018
We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run. Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.
As with all investments, you should only make option trades with money that you can truly afford to lose.
Happy trading,
Terry
Tags: Auto-Trade, Bull Put Credit Spread, Bullish Options strategies, Calls, Credit Spreads, LULU, Lulu Lemon, Monthly Options, Portfolio, Profit, profits, Puts, Risk, TastyWorks, 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 »
Saturday, June 16th, 2018
This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies. We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.
Terry
Has The Tide Turned in Paycom Software (PAYC)?
Investor’s Business Daily, the website belonging to the creators of the IBD Top 50 list, named PAYC their IBD Stock of the Day on Friday. Take a look at the article here for the reason behind the choice. As well, an article published on The Motley Fool explains why Paycom Software is one of three stocks the analyst just added to his retirement portfolio.
After consolidating lower within a correction for about a month or so, PAYC has turned decisively higher, crossing above an important barrier. Two prior attempts since May at the horizontal resistance level near $110 resulted in a notable correction, however, the stock managed to climb above it last week to signal that bulls may be retaking control. The level has been significant since April, acting as both support and resistance. In addition to the horizontal level, the stock has comfortably regained its 20-day moving average and trades near 52-week highs.
PAYC Chart June 2018
*source Tradingview.com
If you agree there’s further upside ahead for PAYC, consider this trade which is a bet that the stock will continue to advance over the next five weeks, or at least not decline very much.
Buy To Open PAYC 20JUL18 105 Puts (PAYC180720P105)
Sell To Open PAYC 20JUL18 110 Puts (PAYC180720P110) for a credit of $1.33 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when PAYC was trading near $112. Unless the stock rallies quickly from here, you should be able to get close to this amount.
Your commission on this trade will only be $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers). Each contract would then yield $130.50 and your broker would charge a $500 maintenance fee, making your investment $369.50 ($500 – $130.50). If PAYC closes at any price above $110 on July 20, both options would expire worthless, and your return on the spread would be 35% (399% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates June 14, 2018
We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run. Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.
As with all investments, you should only make option trades with money that you can truly afford to lose.
Happy trading,
Terry
Tags: Auto-Trade, Bullish Options strategies, Calls, Credit Spreads, Earnings Announcement, Earnings Option Strategy, Earnings Play, Monthly Options, PAYC, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, TastyWorks, Terry's Tips, thinkorswim, Weekly Options
Posted in Credit Spreads, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Monday, June 11th, 2018
This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies. We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.
The actual Terry’s Tips portfolio that trades these weekly suggestions has now gained 106% for the first six months of 2018. We have declared a 2-for-1 split so new followers can get in for about $5000 where it started out the year instead of the $10,311 it is worth today after paying all commissions. Paying Terry’s Tips subscribers can follow these trades on their own or have positions automatically put into their account through the Auto-Trade service offered by thinkorswim.
Terry
Kemet Corporation (KEM) Poised to Retest 52-Week High
Kemet stock has rallied since its earnings report in late May and these two articles suggest the stock price could continue higher – Keep eye on 52-week high price – Kemet Corporation and Is the options market predicting a spike in Kemet stock?
KEM rose above a significant level last week, suggesting that bulls are firmly in control. The horizontal level resides at $21.20 and served as a barrier on two attempts earlier this year, with each prior attempt resulting in a correction lower below $18. The stock now trades at a fresh high for the year with sights on the 52-week high near $27.
KEM Chart June 2018
*source Tradingview.com
If you agree there’s further upside ahead for KEM, consider this trade which is a bet that the stock will continue to advance over the next six weeks, at least a little.
Buy To Open KEM 20JUL18 20 Puts (KEM180720P20)
Sell To Open KEM 20JUL18 23 Puts (KEM180720P23) for a credit of $0.92 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when KEM was trading near $23. Unless the stock rallies quickly from here, you should be able to get close to this amount.
Your commission on this trade will only be $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers). Each contract would then yield $89.50 and your broker would charge a $300 maintenance fee, making your investment $210.50 ($300 – $ 89.50). If KEM closes at any price above $23 on July 20, both options would expire worthless, and your return on the spread would be 43% (413% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates June 7, 2018
We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run. Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.
As with all investments, you should only make option trades with money that you can truly afford to lose.
Happy trading,
Terry
Tags: Auto-Trade, Bull Put Credit Spread, Bullish Options strategies, Credit Spreads, KEM, Monthly Options, Portfolio, Profit, Puts, Risk, Stocks vs. Stock Options, TastyWorks, Terry's Tips, thinkorswim, Weekly Options
Posted in 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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