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Posts Tagged ‘diagonal spreads’

Consider Alibaba (BABA) Following the Technical Break

Monday, November 18th, 2019

Consider Alibaba (BABA) Following the Technical Break

With the stock markets gaining upward momentum Alibaba is gaining attention. The following two analysts have included the stock in their top picks of stocks to own – These 3 ‘Strong Buy’ Giants Still Have Room for Growth, Say Analysts and 5 Mega Cap Stocks Hedge Funds Are Crazy About.

From a technical standpoint, BABA has scaled above a fairly important resistance level at $181. This is a level that held the stock lower since July and the upward break suggests the stock has resumed within its uptrend. Further, the stock has also regained its 20-day moving average and has been trading in a bullish trendline channel which originates from a low printed in early October. There has been a strong show of buying on a retest of the horizontal level in the past week which is also a bullish sign.

BABA Chart November 2019 vertical options spread

BABA Chart November 2019

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 20DEC19 180 Puts (BABA191220P180)
Sell To Open BABA 20DEC19 185 Puts (BABA191220P185) for a credit of $2 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when BABA was trading near $185.  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 $198.70 and your broker would charge a $500 maintenance fee, making your investment $301.30 ($500 – $198.70).  If BABA closes at any price above $185 on December 20, both options would expire worthless, and your return on the spread would be 66% (753% annualized).

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

IBD Underlying Updates November 16, 2019 via Terry's Tips

IBD Underlying Updates November 16, 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

Is CBRE Group (CBRE) on the Verge of a Breakout?

Monday, November 11th, 2019

According to the following article, CBRE is one of the two most actively traded stocks in the Property Management industry. Further, out of the two, they believe it offers better value – CBRE Group, Inc. (CBRE) and Fortive Corporation (FTV) Go Head-to-head. While CBRE’s stock price came under a bit of pressure following its latest earnings report, there were some positive takeaways from it. The main one being an upgrade in earnings per share estimates among analysts. Full details can be found here – CBRE Group, Inc. Third-Quarter Results Just Came Out: Here’s What Analysts Are Forecasting For Next Year

CBRE’s stock price is trading in an ascending triangle which is considered a continuation pattern. The price reaction from the company’s recent earnings report was not positive, however, the decline was brief and well supported by the 100-day moving average. More importantly, the stock has since recovered to nearly fully erase the loss which is a sign of strength. These things combined offer a bullish signal and if the stock breaks above triangle resistance around $56, it could enter into a technical breakout.

CBRE Chart November 2019 vertical options spread

CBRE Chart November 2019

If you agree there’s further upside ahead for CBRE, 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 CBRE 20DEC19 50 Puts (CBRE191220P50)
Sell To Open CBRE 20DEC19 55 Puts (CBRE191220P55) for a credit of $1.18 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when CBRE was trading near $55.  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 $500 maintenance fee, making your investment $383.30 ($500 – $116.70).  If CBRE closes at any price above $55 on December 20, both options would expire worthless, and your return on the spread would be 30% (262% annualized).

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

IBD Underlying Updates November 9, 2019

IBD Underlying Updates November 9, 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

Visa (V) Regains Momentum Following Earnings Report

Monday, October 28th, 2019

Visa’s earnings report in the past week has boosted sentiment among analysts. The following two articles include two upward price target revisions and a case for why the stock can continue to strengthen from here – Visa Analysts Encouraged By Q4 Results, 2020 Guidance and Visa stock gains after forecast paints a picture of continued strength in 2020.

The rally that followed the earnings report has lifted Visa’s stock back above all of the commonly looked at moving averages (20, 50 & 100-day). What’s appealing about V is the long-term trend and that dips have been shallow over the year which points to strong demand. There was a correction lower since early September, but the post-earnings upward momentum suggests the stock may have resumed within its broader uptrend.

Visa Chart October 2019 vertical options spread

Visa Chart October 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, or at least not decline very much.

Buy To Open V 29NOV19 175 Puts (V191129P175)
Sell To Open V 29NOV19 177.5 Puts (V191129P177.5) for a credit of $0.99 (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 $1.30 per spread.  Each contract would then yield $97.05 and your broker would charge a $250 maintenance fee, making your investment $152.30 ($250 – $97.05).  If V closes at any price above $177.5 on November 29, both options would expire worthless, and your return on the spread would be 63% (730% annualized).

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

IBD Underlying Updates October 26, 2019

IBD Underlying Updates October 26, 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

Synchrony Financial (SYF) Gets a Boost From its Latest Earnings Report

Monday, October 21st, 2019

Synchrony Financial rallied to a two-month high in the past week and several analysts think it can continue higher. Here is what the IBD had to say about the stock – This GE Spinoff Nears Buy Point On Strong Earnings. Also take a look at the following article which discusses Warren Buffett’s stake in the company – Here is What Hedge Funds Think About Synchrony Financial (SYF).

SYF recently regained both its 50 and 100 day moving averages which signals the broader bullish trend has potentially restarted. Of the two, the 100-day moving average was particularly strong resistance throughout September. For this reason, the indicator is now seen as strong support on near-term dips. The break above the 100-day moving average also means a break above the September high which in turn has set a successions of higher highs and higher lows. Another way to look at it is as a range breakout since the stock was essentially consolidating sideways above its 200-week moving average for the past two months or so.

SYF Chart October 2019 vertical options spread

SYF Chart October 2019

If you agree there’s further upside ahead for SYF, 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 SYF 22NOV19 31.5 Puts (SYF191122P31.5)
Sell To Open SYF 22NOV19 34.5 Puts (SYF191122P34.5) for a credit of $0.93 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when SYF was trading near $34.50.  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 $1.30 per spread.  Each contract would then yield $91.70 and your broker would charge a $300 maintenance fee, making your investment $208.30 ($300 – $91.70).  If SYF closes at any price above $34.50 on November 22, both options would expire worthless, and your return on the spread would be 44% (502% annualized).

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

IBD Underlying Updates October 19, 2019

IBD Underlying Updates October 19, 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

Salesforce.com (CRM) Offers Value After the Correction

Monday, October 14th, 2019

Salesforce.com’s stock price has corrected lower for the past few months which seems to offer value when considering where analyst price targets are set. Take a look at the following article which discusses an average target of $186.97 –  Investors Jump Off The Fence: salesforce.com, inc., (NYSE: CRM). Also, Jeffries recently reiterated their buy call with a target of $171. Although a bit conservative compared to the average, it still represents potential for a 14% rally.

There are three main things to consider from a technical perspective. The most important is that the stock is bouncing from its 20-month moving average. This is an indicator it has not traded below on a sustained basis in nearly three years. Further, there is a rising trendline in place as well as a horizontal level. The trendline is drawn connecting the low from late last year with the low that printed in mid-August. There has been a bullish reaction so far from when the stock tested the trendline early in the month. The horizontal level falls near $144 and has been respected as both support and resistance over the last year and currently falls near the trendline to create a confluence.

CRM Chart October 2019 Salesforce.com vertical options spread

CRM Chart October 2019

If you agree there’s further upside ahead for CRM, 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 CRM 15NOV19 145 Puts (CRM191115P145)
Sell To Open CRM 15NOV19 150 Puts (CRM191115P150) for a credit of $1.99 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when CRM was trading near $150.  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 $197.70 and your broker would charge a $500 maintenance fee, making your investment $302.30 ($500 – $197.70).  If CRM closes at any price above $150 on November 15, both options would expire worthless, and your return on the spread would be 65% (741% annualized).

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

IBD Underlying Updates October 12, 2019

IBD Underlying Updates October 12, 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

Copart (CPRT) Is a Buy on Dips

Monday, October 7th, 2019

Recent news articles on Copart suggest the stock is well positioned for further gains. Check out these two articles for the reasoning behind the sentiment – Why Copart (CPRT) Stock Might be a Great Pick and Is Copart (CPRT) a Great Growth Stock?

The main thing CPRT has going for it, from a technical perspective, is the upward momentum. The stock has rallied with strength ever since the 50-day moving average crossed above the 100-day near the start of the year. Dips have been shallow and promptly bought up and the stock is up nearly 70% on the year. The dip in the past week was met with strong buying from the 20-week moving average which has resulted in the print of a bullish reversal candlestick on a weekly chart. CPRT is certainly an outperformer and it seems the stock only needs a small push to break to fresh record highs.

CPRT Chart October 2019 vertical options spread

CPRT Chart October 2019

If you agree there’s further upside ahead for CPRT, 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 CPRT 15NOV19 75 Puts (CPRT191115P75)
Sell To Open CPRT 15NOV19 80 Puts (CPRT191115P80) for a credit of $1.58 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when CPRT 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 $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 – $156.71).  If CPRT closes at any price above $80 on November 15, both options would expire worthless, and your return on the spread would be 45% (429% annualized).

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

IBD Underlying Updates October 5, 2019

IBD Underlying Updates October 5, 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

Lululemon Athletica Nears Major Technical Support Area

Monday, September 30th, 2019

Lululemon Athletica’s reported earnings in early September which led to a rally to fresh all-time highs. Several analysts are expecting more upside, here are two of them – Is Lululemon (LULU) a Solid Growth Stock? 3 Reasons to Think ” Yes “ and UBS Group Analysts Give Lululemon Athletica (NASDAQ:LULU) a $210.00 Price Target.

After hitting all-time highs, LULU has edged lower to pare gains related to the earnings report. A confluence of support is in sight and considered quite strong. The confluence consists of the 50-Day moving average, a horizontal level, and the lower bound of a long-term bullish trend channel. The horizontal level comes in at $188 and previously acted as resistance on several rallies since June. The trend channel dates back to a low printed in late December and has contained price action since.

LULU Chart September 2019 vertical earnings spread

LULU Chart September 2019

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 01NOV19 187.5 Puts (LULU191101P187.5)
Sell To Open LULU 01NOV19 190 Puts (LULU191101P190) for a credit of $1.10 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when LULU was trading near $190.  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 $107.50 and your broker would charge a $250 maintenance fee, making your investment $142.50 ($250 – $107.50).  If LULU closes at any price above $190 on November 1, both options would expire worthless, and your return on the spread would be 75% (855% annualized).

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

IBD Underlying Updates September 28, 2019

IBD Underlying Updates September 28, 2019

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

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

Happy trading,

Terry

Should You Buy the Dip in Adobe (ADBE)?

Monday, September 23rd, 2019

The following two articles certainly suggest Adobe is a good buy on the current dip – Adobe: Timely Buying Opportunity and Adobe: Take Advantage of Bearishness to Buy a High-Quality Stock Cheaper.

From a technical perspective, ADBE is testing a major support confluence. The confluence consists of a horizontal line at $275 as well as the 200-day moving average. The horizontal level was major resistance that held the stock lower in 2018 and it is now seen as support. There has been some evidence of the support area holding so far but a break above recent highs around $285 would provide further confirmation.

ADBE Chart September 2019 verticle options spread

ADBE Chart September 2019

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 not decline very much.

Buy To Open ADBE 25OCT19 275 Puts (ADBE191025P275)
Sell To Open ADBE 25OCT19 277.5 Puts (ADBE191025P277.5) for a credit of $0.95 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when ADBE was trading near $278.  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 ADBE closes at any price above $277.5 on October 25, both options would expire worthless, and your return on the spread would be 59% (673% annualized).

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

IBD Underlying Updates September 21, 2019 options trading ideas

IBD Underlying Updates September 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

Boot Barn (BOOT): A Momentum Stock That Has More Than Doubled in 2019

Monday, September 16th, 2019

After already doubling this year, one analyst expects that it can do it again. Take a look at the full article here – Boot Barn: Another Doubling Is Possible. Also take a look at the following article which makes the case for continued steady gains in BOOT – Two stocks I’d tuck away forever: Boot Barn Holdings (BOOT), Canadian Solar (CSIQ).

Boot Barn stock has been rallying strongly higher since the start of the year and a rising trend channel has encompassed price action. There were three major tests of the lower bound of said channel since August and buyers have defended each one of them. With the price now firmly above all the commonly looked at moving averages, it appears safe to say that buyers are in control. Technical support for near-term dips is found at $33.19. The area is considered significant as a confluence resides there. It contains a horizontal level, the 20-day moving average, and the 50-day moving average.

BOOT Chart September 2019 verticle options spread

BOOT Chart September 2019

If you agree there’s further upside ahead for BOOT, 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 BOOT 18OCT19 30 Puts (BOOT191018P30)
Sell To Open BOOT 18OCT19 35 Puts (BOOT191018P35) for a credit of $1.23 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when BOOT was trading near $36.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $120.50 and your broker would charge a $500 maintenance fee, making your investment $379.50 ($500 – $120.50).  If BOOT closes at any price above $35 on October 18, both options would expire worthless, and your return on the spread would be 32% (365% annualized).

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

IBD Underlying Updates September 14, 2019 weekly trade idea

IBD Underlying Updates September 14, 2019

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

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

Happy trading,

Terry

CDW Corp. (CDW) Is Poised to Break to Fresh Record Highs

Monday, September 9th, 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.

CDW Corp. (CDW) Is Poised to Break to Fresh Record Highs

Several Analysts are optimistic about CDW’s outlook, take a look at what there two publications have to say – Is CDW (CDW) Outperforming Other Computer and Technology Stocks This Year? And With EPS Growth And More, CDW (NASDAQ:CDW) Is Interesting.

The most impressive part of CDW is how steadily it has been rising throughout the year. Dips in the stocks price are shallow and appear to be quickly bought up. A rising trend channel has encompassed price action and there are several layers of downside support. The first is a horizontal level that comes in just above $116. Further support comes from the 50-day moving average, currently near $113.50. The moving average is near the bottom of the trend channel and therefore is considering to be major support.

CDW Chart September 2019 verticle options spread

CDW Chart September 2019

If you agree there’s further upside ahead for CDW, 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 CDW 18OCT19 110 Puts (CDW191018P110)
Sell To Open CDW 18OCT19 115 Puts (CDW191018P115) for a credit of $1.18 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when CDW 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 $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 CDW closes at any price above $115 on October 18, both options would expire worthless, and your return on the spread would be 30% (281% annualized).

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

IBD Underlying Updates September 5, 2019 weekly trade idea

IBD Underlying Updates September 5, 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

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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.

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