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Posts Tagged ‘Bullish Options strategies’

The Trade Desk (TTD) Has the Potential to Break to an All-Time High

Monday, May 25th, 2020

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Several stocks have already broken to all-time highs and TTD looks poised to join this group. Check out the following two articles that both suggest that while TTD might be a bit expensive, it is a top pick among investors – The Trade Desk: Capturing A Revolutionary Trend and Investing in These 3 Top Stocks Could Double Your Money.

Technicals

TTD has shown strong upward momentum since the start of April. Dips have been shallow as buyers are quick to step in. Resistance near $324 has triggered a bit of pullback over the past few weeks which is to be expected considering it marks the previous all-time high. But the general lack of selling pressure from $324 is a sign of strength. Combined with the strong upward momentum as of late, a strong case can be made that the stock is headed to all-time highs. Technical support for the stock is seen at $280 which is considered significant as it acted as a major barrier over the summer last year.

TTD Chart May 2020 - Stock All Time High

TTD Chart May 2020

If you agree there’s further upside ahead for TTD, 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 TTD 26JUN20 305 Puts (TTD200626P305)
Sell To Open TTD 26JUN20 307.5 Puts (TTD200626P307.5) for a credit of $1.18 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when TTD was trading near $308.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $116.70 and your broker would charge a $250 maintenance fee, making your investment $133.30 ($250 – $116.70).  If TTD closes at any price above $307.5 on June 26, both options would expire worthless, and your return on the spread would be 88% (1004% annualized).

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

IBD Underlying Updates May 23, 2020

IBD Underlying Updates May 23, 2020

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

American Tower (AMT) Looks Attractive as Investors Once Again Focus on 5G

Monday, May 18th, 2020

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

5G was a hot topic among investors ahead of the Coronavirus escalation. Now that the markets are picking up momentum again, companies that stand to gain from this technology are in the spotlight. Take a look at the following article which discusses how AMT stands to gain – 5G Is Still Coming Despite Covid-19. These Are the Stocks Set to Benefit First. Also, have a look at this article – 5G Will Be a Game-Changer for American Tower. It mentions that the stock may see some near-term weakness and that investors should take advantage of that. Interestingly, the stock has shown exactly that as it has pulled back from recent highs since the article was written.

Technicals

Two things stand out in the recent price action for AMT. First, it was able to rally to fresh record highs in April. Although it was brief, it shows strength and provides some confirmation that the uptrend remains intact. The second appeal is that the stock is currently testing its 200-day moving average. This particular indicator was well-respected in late 2019 and managed to hold the stock higher on several tests. It’s one of the more commonly watched moving averages and technical traders will be well aware of its presence.

AMT Chart May 2020: 5G stock resurgance despite COVID

AMT Chart May 2020

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 a little.

Buy To Open AMT 19JUN20 220 Puts (AMT200619P220)
Sell To Open AMT 19JUN20 230 Puts (AMT200619P230) for a credit of $3.48 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when AMT was trading near $230.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $346.70 and your broker would charge a $1000 maintenance fee, making your investment $653.30 ($1000 – $346.70).  If AMT closes at any price above $230 on June 19, both options would expire worthless, and your return on the spread would be 53% (605% annualized).

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

IBD Underlying Updates May 16, 2020

IBD Underlying Updates May 16, 2020

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Solar Edge (SEDG) is Well Positioned to Break to a Record High

Monday, May 11th, 2020

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Solar Edge is up 75% from its lows in March and several analysts think the stock can continue higher. Check out the following articles which discuss the appeal – 5 Under-the-Radar Energy Stocks to Buy Now and Why Shares of SolarEdge Technologies Popped 43.3% in April.

Technicals

SEDG is showing strong upward momentum over the last month. There was a dip in the past week following earnings but the stock has recovered a bulk of the loss which is often a sign of strength. Since climbing above the 20-day moving average, buyers have been quick to step in on dips well ahead of the moving average. A horizontal level at $111 was a major hurdle early in the year and the weekly close above it further builds towards a bullish case.

SEDG Chart May 2020 options ideas

SEDG Chart May 2020

If you agree there’s further upside ahead for SEDG, 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 SEDG 19JUN20 110 Puts (SEDG200619P110)
Sell To Open SEDG 19JUN20 115 Puts (SEDG200619P115) for a credit of $1.58 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when SEDG was trading near $118.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $156.70 and your broker would charge a $500 maintenance fee, making your investment $343.30 ($500 – $156.70).  If SEDG closes at any price above $115 on June 19, both options would expire worthless, and your return on the spread would be 46% (431% annualized).

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

IBD Underlying Updates May 9, 2020

IBD Underlying Updates May 9, 2020

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Cloud-Based Software Company Veeva Systems (VEEV) Breaks to a Record High

Monday, April 20th, 2020

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Veeva Systems is among a small group of stocks that broke to an all-time high in the past week. The Investor’s Business Daily recently wrote an article explaining why the stock stands out – IBD 50 Growth Stocks To Watch: Veeva’s Virtual Role In The Coronavirus Fight. Also have a look at the following article which discusses the company’s strong financials and prospects for growth – Is Now The Time To Put Veeva Systems (NYSE:VEEV) On Your Watchlist?

Technicals

VEEV Chart April 2020

VEEV Chart April 2020

The main appeal to VEEV is that it is a clear outperformer. The stock broke above $177 in the past week which signals that the uptrend has resumed after a correction that started in July last year and lasted until about a month ago. The stock is a bit oversold over the near-term and this could result in a consolidation. However, the bullish break stands to keep the stock well bid on dips with the first level of support at last year’s high of $177.

If you agree there’s further upside ahead for VEEV, 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 VEEV 15MAY20 175 Puts (VEEV200515P175)
Sell To Open VEEV 15MAY20 180 Puts (VEEV200515P180) for a credit of $2.18 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when VEEV was trading near $181.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $216.70 and your broker would charge a $500 maintenance fee, making your investment $283.30 ($500 – $216.70).  If VEEV closes at any price above $180 on May 15, both options would expire worthless, and your return on the spread would be 76% (1110% annualized).

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

IBD Underlying Updates April 18, 2020

IBD Underlying Updates April 18, 2020

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Has Adobe (ADBE) Reverted to a Bullish Trend?

Monday, April 13th, 2020

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

With the markets gaining upward momentum, several analysts have had good things to say about Adobe. Here is what the IBD thinks about the stock – Is Adobe Stock A Buy Right Now? Here’s What Earnings, ADBE Chart Show. Also take a look at the following article which makes a case that the company is in a good position to handle the impact of the Coronavirus – Adobe: A Resilient Software Giant

Technicals

The main technical development for ADBE as of late is that it has comfortably regained its 200-day moving average. This particular indicator has drawn buyers in the past and dips below it have generally been short-lived in the recent past. The stock appears to be building a base for its next move higher. Further, the monthly candle for March signals that there was strong buying after the dip below $300. Over the near-term, the $327 price point has proven to be a small hurdle. A break above can lead to a rally towards $360 which is a significant technical area for the stock.

ADBE Chart April 2020 bullish trend

ADBE Chart April 2020

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 five weeks, or at least a little bit.

Buy To Open ADBE 15MAY20 315 Puts (ADBE200515P315)
Sell To Open ADBE 15MAY20 320 Puts (ADBE200515P320) for a credit of $1.60 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when ADBE was trading near $319.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $158.70 and your broker would charge a $500 maintenance fee, making your investment $341.30 ($500 – $158.70).  If ADBE closes at any price above $320 on May 15, both options would expire worthless, and your return on the spread would be 46% (525% annualized).

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

IBD Underlying Updates April 11, 2020

IBD Underlying Updates April 11, 2020

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Has Alibaba (BABA) Reversed Into a Bullish Trend?

Monday, March 30th, 2020

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

With the markets bouncing higher, news outlets have started publishing articles on where big investors are putting their money. Have a look at what these two articles have to say about Alibaba – Bullish investors pour money into Alibaba, Amazon, Intel and Microsoft and 5 Stocks Top Earners Steven Cohen and David Tepper Agree On.

Technicals

BABA has bounced higher from an important technical support confluence that consists of a rising trendline and a horizontal level. The trendline originates from a low posted at the end of 2018 and the while the stock holds above it, the broader bullish looks to still be intact. Since turning from this support confluence, BABA has regained it’s 200-day moving average which is encouraging for bulls. Buyers should defend dips towards the trendline to maintain the upward momentum. A possible near-term target is found at $211 which has previously acted as both support and resistance.

BABA Chart March 2020 bullish trend

BABA Chart March 2020

If you agree there’s further upside ahead for BABA, consider this trade which is a bet that the stock will continue to advance over the next five weeks, or at least not decline very much.

Buy To Open BABA 08MAY20 185 Puts (BABA200508P185)
Sell To Open BABA 08MAY20 187.5 Puts (BABA200508P187.5) for a credit of $1.03 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when BABA was trading near $189.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $101.70 and your broker would charge a $250 maintenance fee, making your investment $148.30 ($250 – $101.70).  If BABA closes at any price above $187.5 on May 08, 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 March 28, 2020

IBD Underlying Updates March 28, 2020

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Domino’s Pizza (DPZ) is on a Hiring Spree to Meet a Pickup in Demand

Monday, March 23rd, 2020

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Amidst all the Coronavirus chaos, Domino’s Pizza is busy searching for new workers to meet a recent increase in demand. Check out the following two articles for more details – Domino’s expects to hire 10,000 workers and Why Domino’s, Wendy’s, and Papa John’s Are Absolutely Soaring Thursday.

Technicals

DPZ recently broke above a horizontal level at $299 which is considered to be significant as the same level served the hold the stock lower on several attempts since the summer last year. The initial break higher followed its earnings report last month. The stock has pulled back since then and is currently being held higher by the same price point as well as the 200-day moving average. From a technical point of view, this is an area where the stock can reverse back into an uptrend after pulling back over the last month.

DPZ Chart March 2020 hiring among COVD-19 outbreak

DPZ Chart March 2020

If you agree there’s further upside ahead for DPZ, 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 DPZ 24APR20 295 Puts (DPZ200424P295)
Sell To Open DPZ 24APR20 300 Puts (DPZ200424P300) for a credit of $2.23 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when DPZ was trading near $300.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $221.70 and your broker would charge a $500 maintenance fee, making your investment $278.30 ($500 – $221.70).  If DPZ closes at any price above $300 on April 24, both options would expire worthless, and your return on the spread would be 80% (913% annualized).

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

IBD Underlying Updates March 21, 2020

IBD Underlying Updates March 21, 2020

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Emergent (EBS) Rallies as CEO Discusses Plans of Coronavirus Vaccine Development

Monday, March 16th, 2020

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

A few biotech companies are rallying as investors are encouraged by the prospect of a Coronavirus vaccine, and EBS is one of them. The following two articles discuss the matter in detail –  Emergent (EBS) Begins Development of Treatments for COVID-19 and Emergent BioSolutions CEO Talks Coronavirus Vaccine Development.

Technicals

EBS is an outperformer and posted its highest weekly close since 2018 in the past week. In the process, the stock has overtaken a major horizontal resistance level at $66 that proved to be a hurdle on a few attempts between 2019 and 2020. On a weekly chart, the stock has posted a strong upside candle that erases several weeks of declines which can be seen as a bullish signal. Further, the stock is in a clear uptrend since bottoming out in late August and the recent upward momentum suggests the bullish trend remains intact.

EBS Chart March 2020 Covid-19 response

EBS Chart March 2020

If you agree there’s further upside ahead for EBS, 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 EBS 17APR20 65 Puts (EBS200417P65)
Sell To Open EBS 17APR20 70 Puts (EBS200417P70) for a credit of $1.78 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when EBS was trading near $69.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $176.70 and your broker would charge a $500 maintenance fee, making your investment $323.30 ($500 – $176.70).  If EBS closes at any price above $70 on April 17, 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 March 14, 2020

IBD Underlying Updates March 14, 2020

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Regeneron Pharmaceuticals (REGN) Rallies to Two and a Half Year High

Monday, March 9th, 2020

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

While many companies have seen a sharp drop in their stock price as a result of the Coronavirus, REGN has broken to levels not seen since September 2017. Take a look at the following two articles for details – Regeneron (REGN) Gains from Focus on Coronavirus Treatments and Why Regeneron Shares Rose 31.6% in February.

Technicals

The weekly chart below shows REGN breaking higher from a downward trend channel that has contained price action for nearly five years. This type of upward break usually signals a bullish continuation. On a daily chart, the stock also shows strong upward momentum and technical signs of breaking out. The main appeal to this stock is that it is notably outperforming in a period where the markets have generally been under pressure. Further, the stock is benefiting from the same driver that is otherwise creating downward pressure in the broader equity markets.

REGN Chart March 2020: Coronavirus testing

REGN Chart March 2020

If you agree there’s further upside ahead for REGN, 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 REGN 09APR20 490 Puts (REGN200409P490)
Sell To Open REGN 09APR20 492.5 Puts (REGN200409P492.5) for a credit of $1.18 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when REGN was trading near $494.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $116.70 and your broker would charge a $250 maintenance fee, making your investment $133.30 ($250 – $116.70).  If REGN closes at any price above $492.5 on April 09, both options would expire worthless, and your return on the spread would be 88% (1004% annualized).

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

IBD Underlying Updates March 7, 2020

IBD Underlying Updates March 7, 2020

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Buy the Dip in Microsoft (MSFT)

Monday, February 24th, 2020

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Microsoft’s stock price dipped in the past week and these two following articles point out several reasons why investors might want to take advantage of the dip – Microsoft (MSFT): Strong Industry, Solid Earnings Estimate Revisions, and 3 Reasons Microsoft Has More Growth Ahead of It.

Technicals

While MSFT corrected lower last week, downward momentum is lacking when compared to prior weeks. The stock is currently testing the 20-day moving average which is an indicator MSFT has not traded below on a sustained basis in at least six months. Further support is seen at $174 which is a horizontal level near that acted as resistance last month. The strongest appeal to this stock is that the upward momentum has been increasing since it broke out in late October, and this upward momentum has not been negated by the recent dip. It would take a sustained drop below $174 to alter the near-term outlook for MSFT.

MSFT Chart February 2020 buy in dip

MSFT Chart February 2020

If you agree there’s further upside ahead for MSFT, 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 MSFT 27MAR20 175 Puts (MSFT200327P175)
Sell To Open MSFT 27MAR20 177.5 Puts (MSFT200327P177.5) for a credit of $0.98 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when MSFT was trading near $179.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $96.70 and your broker would charge a $250 maintenance fee, making your investment $153.30 ($250 – $96.70).  If MSFT closes at any price above $177.5 on March 27, both options would expire worthless, and your return on the spread would be 63% (719% annualized).

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

IBD Underlying Updates February 22, 2020

IBD Underlying Updates February 22, 2020

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Making 36%

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

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Success Stories

I have been trading the equity markets with many different strategies for over 40 years. Terry Allen's strategies have been the most consistent money makers for me. I used them during the 2008 melt-down, to earn over 50% annualized return, while all my neighbors were crying about their losses.

~ John Collins