Archive for the ‘Earnings Announcement Options Strategy’ Category
Monday, August 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.
Terry
Visa (V) Dips – Is it Time to Get In?
One analyst recently wrote an article titled Load Up On Visa which is the type of thing usually said when there is a sharp fall in the stock discussed, in the context that it is being offered at a discount. This is certainly not the case with Visa as the correction a few weeks back was much more shallow when compared to other stocks in the sector. The headline goes to show just how positive sentiment is. Also take a look at the following article which discusses Visa’s performance compared to its sector – Is Visa (V) Stock Outpacing Its Business Services Peers This Year?
From a technical perspective, the stock dipped lower in the early month but caught a strong bid near support to erase losses. There is a horizontal level in play at $172 which seems to have been respected by the market. If offered resistance in early June, and support after a gap up later in the month. Earlier this month, the same level held the stock at the open when it gapped lower. The 50-day moving average is also in play, and it is starting to look like the stock has regained it. The overall trend in Visa is impressive and pull backs throughout the rally this year have been shallow. Another sign of strength is how stable the stock was in the past week while the markets were generally volatile and under pressure.
V Chart August 2019
If you agree there’s further upside ahead for V, 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 V 20SEP19 175 Puts (V190920P175)
Sell To Open V 20SEP19 180 Puts (V190920P180) for a credit of $2.06 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when V 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 $203.50 and your broker would charge a $500 maintenance fee, making your investment $296.50 ($500 – $203.50). If V closes at any price above $180 on September 20, both options would expire worthless, and your return on the spread would be 69% (787% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates August 15, 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, Bullish Options strategies, Calendar Spreads, Calls, Credit Spreads, diagonal spreads, Earnings Option Strategy, implied volatility, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, TastyWorks, Terry's Tips, thinkorswim, V, Visa, 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 »
Monday, July 29th, 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 Following Earnings, What’s Next?
PayPal slipped lower after reporting earnings in the past week. Take a look at what these analysts are saying about the stock post-earnings – PayPal Q2 Earnings Beat Estimates, Revenues Up Y/Y and PayPal’s Earnings May Have Disappointed but Its Chart is “BTF”.
Paypal dipped to the 50-day moving average on Thursday and held above the moving average on Friday. The stock trades at a confluence of support as there is also a horizontal level in play. The level comes in at $113.70 and acted as both resistance and support in the past. In the event the stock falls to hold here, there is further support from the 100-day moving average close to around $112.
PYPL Chart July 2019
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, or at least not decline very much.
Buy To Open PYPL 30AUG19 112 Puts (PYPL190830P112)
Sell To Open PYPL 30AUG19 115 Puts (PYPL190830P115) for a credit of $1.45 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when PYPL was trading near $115. 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 $142.50 and your broker would charge a $300 maintenance fee, making your investment $157.50 ($300 – $142.50). If PYPL closes at any price above $115 on August 30, both options would expire worthless, and your return on the spread would be 90% (1027% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates July 25, 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, Calendar Spreads, Calls, Credit Spreads, diagonal spreads, Earnings Announcement, Earnings Option Strategy, Earnings Play, implied volatility, Monthly Options, Portfolio, Profit, profits, Puts, PYPL, Risk, SPY, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Weekly Options
Posted in 10K Strategies, Coffee Can Investing, Credit Spreads, Earnings Announcement Options Strategy, Monthly Options, SPY, Stock Option Trading Idea Of The Week, Stock Options Strategies, Weekly Options | No Comments »
Sunday, March 24th, 2019
This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies. We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.
Terry
Consider Amazon.com (AMZN) Following the Technical Breakout
AMZN recently made a significant technical break that stands to have bullish repercussions, take a look at what these two analysts have to say about it – Amazon’s Breakout May Fuel A Return To Its All-Time Highs and Amazon Stock Is Finally Breaking Out.
There are several ways to view the AMZN breakout, the above two articles include several of the variations. The one technical break that most are probably watching is the push above the stocks 200 daily moving average. The below chart shows that price stalled out near it three times this year prior to the technical break last week. A declining trendline originating from a high posted in October is also in play. In the current pullback, strong support is seen at the moving average followed by the previously broken descending trendline which is found slightly below the indicator.
AMZN Chart March 2019
If you agree there’s further upside ahead for AMZN, consider this trade which is a bet that the stock will continue to advance over the next five weeks, or at least not decline very much.
Buy To Open AMZN 26APR19 1760 Puts (AMZN190426P1760)
Sell To Open AMZN 26APR19 1762.5 Puts (AMZN190426P1762.5) for a credit of $0.98 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when AMZN was trading near $1765. Unless the stock rallies quickly from here, you should be able to get close to this amount.
Your commission on this trade will only be $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers). Each contract would then yield $95.50 and your broker would charge a $250 maintenance fee, making your investment $154.50 ($250 – $95.50). If AMZN closes at any price above $1762.5 on April 26, both options would expire worthless, and your return on the spread would be 62% (707% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates March 21, 2019
We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run. Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.
As with all investments, you should only make option trades with money that you can truly afford to lose.
Happy trading,
Terry
Tags: AMZN, Auto-Trade, Bull Put Credit Spread, Bullish Options strategies, Credit Spreads, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, SPY, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Weekly Options
Posted in 10K Strategies, Credit Spreads, Earnings Announcement Options Strategy, Greeks, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Sunday, 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 »
Sunday, January 6th, 2019
This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies. We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.
Terry
Will Five9 Inc (FIVN) Break Higher From It’s Range?
Take a look at what these analysts have to say about Five9 – IBD 50 Stocks To Watch: How Cloud, AI Shape Five9’s Software Future and Lookout for these Two stocks: American International Group, Five9 Inc.
Five9 has consolidated higher since hitting a low in late October and is seen trading within a range. The stock is an outperformer as most stocks posted losses in the last two months of the year. A technical pattern is emerging as a triangle can be drawn around the recent consolidation. To the upside, a break above $44.40 would suggest a bullish breakout. There is a confluence of downside support deriving from a rising trendline, the 50-day moving average, as well as a horizontal level. The horizontal level, which resides at $39.55, is considered well respected as it has acted both resistance and support on several occasions since the initial test in June.
*source Tradingview.com
If you agree there’s further upside ahead for FIVN, 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 FIVN 15FEB19 35 Puts (FIVN190215P35)
Sell To Open FIVN 15FEB19 40 Puts (FIVN190215P40) for a credit of $1.18 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when FIVN was trading near $43. 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 FIVN closes at any price above $40 on February 15, 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 January 3, 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, FIVN, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, Straddles, Terry's Tips, thinkorswim, Volatility, Weekly Options
Posted in 10K Strategies, Credit Spreads, Earnings Announcement Options Strategy, Lazy Way Strategy, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Sunday, December 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
Kirkland Lake Gold (KL) Follows Gold Prices Higher
Kirkland Lake Gold has been an outperformer among the IBD Top 50 companies, gaining from strength in the price of Gold. Take a look at this article which speculates a significant upside based on a technical outlook – Kirkland Lake Gold Is Shining Bright on the Charts and this following article which discusses the performance of KL as well as other stocks and ETF’s within the same sector – Gold Mining Crushing the Market: Best ETFs & Stocks of Q4.
KL has made a clear break higher this month to trade at record highs. The company stands out when compared to other IBD Top 50 stocks as it is the only one to make a decisive break higher. The main appeal to KL is the recent acceleration in upside momentum which is evident on nearly every time frame. Horizontal support is found near $23 as the level held the stock lower over the summer, however, considering the bullish momentum, investors may look to step in ahead of the level.
KL Chart December 2018
*source Tradingview.com
If you agree there’s further upside ahead for KL, 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 KL 15FEB19 22.5 Puts (KL190215P22.5)
Sell To Open KL 15FEB19 25 Puts (KL190215P25) for a credit of $.93 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when KL was trading near $25. 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 $90.50 and your broker would charge a $250 maintenance fee, making your investment $159.50 ($250 – $90.50). If KL closes at any price above $25 on February 15, both options would expire worthless, and your return on the spread would be 57% (452% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates December 27, 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, Bearish Options Strategies, Bull Put Credit Spread, Bullish Options strategies, KL, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, Straddles, 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 »
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