Posts Tagged ‘Earnings Option Strategy’
Sunday, February 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. The actual Terry’s Tips portfolio that trades these ideas of the week has gained 148% in the first two months of 2019. Of course, past results are not always duplicated in the future, but we like our chances here.
Terry
Will Regeneron Pharmaceuticals Continue to Outperform Its Sector?
Regeneron Pharmaceuticals (REGN) has been a long-term performer, see what these two analysts have to say about the company moving forward – Why I Like Regeneron Pharmaceuticals, Inc. and Is Regeneron Pharmaceuticals Stock Outpacing Its Medical Peers This Year?
The main technical appeal to REGN is its ability to hold above a horizontal level near $410 that held the stock lower late last year. The level is now seen as strong support and recent price action seems to support that as a dip following their recent earnings report was bought up near the level. There is some confluence at the price point as the 50-Monthly moving average is slightly above it. The stock trades within a rising trend channel that originates from a low in May last year and the upper bound of the channel currently falls around $450-$460.
REGN Chart February 2019
*source Tradingview.com
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 29MAR19 417.5 Puts (REGN190329P417.5)
Sell To Open REGN 29MAR19 420 Puts (REGN190329P420) 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 $423. 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 $250 maintenance fee, making your investment $134.50 ($250 – $115.50). If REGN closes at any price above $420 on March 29, both options would expire worthless, and your return on the spread would be 86% (981% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates February 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: Auto-Trade, Bull Put Credit Spread, Bullish Options strategies, Calendar Spreads, Calls, Credit Spreads, diagonal spreads, Earnings Option Strategy, Monthly Options, Options Tutorial Program, Profit, profits, Puts, REGN, Risk, SPY, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Weekly Options
Posted in Uncategorized | 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 »
Monday, December 17th, 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
Will Growth Prospects Keep Mastercard (MA) Bid?
Mastercard has had some positive news coverage as of late, take a look at these two articles – Visa & Mastercard: Strong Growth and Dividend Hike Opportunities? And IBD Stock Of The Day Master Shows Strength – And Gives This Market Warning.
As outlined by one of the above articles, MA is currently facing it’s 200-Day moving average. Althought the article points out that the stock technically trades below it, there does not seem to be enough evidence of a clear break, or that bears have taken control. The stock has held above a horizontal level found near $193 found close to the moving average that has acted as both support and resistance on several occasions since May. Dips below this confluence area of support in the recent past have been short-lived, as seen on a monthly chart, where the stock has managed to hold above $197 on a monthly close basis.
MA Chart December 2018
*source Tradingview.com
If you agree there’s further upside ahead for MA, 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 MA 25JAN18 190 Puts (MA190125P190)
Sell To Open MA 25JAN18 192.5 Puts (MA190125P192.5) for a credit of $1.10 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when MA was trading near $195. 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 MA closes at any price above $192.5 on January 25, both options would expire worthless, and your return on the spread would be 75% (702% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates December 13, 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, Earnings Option Strategy, MA, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, 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, December 10th, 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
Will Medpace Holdings (MEDP) Break to New All Time Highs?
Medpace Holdings has been getting some media attention as of late, take a look at these two articles to see what analysts are saying about this stock – MEDP vs PRAH: Which Stock Should Value Investors Buy Now? and Bullish Trend Signal for Medpace Holdings.
The technical appeal in MEDP is it’s outperformance compared to the broader markets as well as some of the other stocks on the IBD Top 50 list. MEDP has had a pickup in upside momentum since late October which seems to suggest it has resumed it’s uptrend following a correction. In the past week, the stock saw some sellers near the $64 price point which resulted in a decline towards its 20-day moving average. A break of $64 would have the stock trading at all time highs. The stock appears to be well supported here with further support slightly below the 20-day moving average at $55 which was a level that held it higher after the gap up in late July. As well, there is a rising trendline near the horizontal level that is drawn by connecting the October and November low
MEDP Chart December 2018
*source Tradingview.com
If you agree there’s further upside ahead for MEDP, 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 MEDP 18JAN19 50 Puts (MEDP190118P50)
Sell To Open MEDP 18JAN19 55 Puts (MEDP190118P55) for a credit of $1.33 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when MEDP was trading near $58. 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 MEDP closes at any price above $55 on January 18, both options would expire worthless, and your return on the spread would be 35% (312% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates December 6, 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, diagonal spreads, Earnings Option Strategy, MEDP, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, SPY, Stocks vs. Stock Options, 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, December 2nd, 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.
Last week, the market (SPY) enjoyed its best week in 7 years. The 8 real-life option portfolios carried out by Terry’s Tips shared in the good news. Our composite portfolio value gained 27% for the week, one of our best weeks ever.
Terry
Can Intel Corp. (INTC) Overcome The $50 Psychological Barrier?
Several analysts think Intel stock can move a lot higher, here are two of them – Why Intel ‘s Stock Is Poised To Surge and Bull of the Day: Intel (INTC).
From a technical perspective, INTC is facing a wall of resistance consisting of the psychological $50 barrier as well as the 200-day moving average. However, the stock is seen consolidating below this resistance zone through out the month of November within a relatively small range which signals a lack of selling pressure. This type of price action usually suggests that the bears are not in control and that the stock may well be on the verge of breaking higher. As well, on a weekly chart, INTC posted a bullish engulfing candle as a result of price action in the past week which signals strength and favors a continuation higher.
INTC Chart November 2018
*source Tradingview.com
If you agree there’s further upside ahead for INTC, consider this trade which is a bet that the stock will continue to advance over the next six weeks, at least a little bit.
Buy To Open INTC 11JAN18 47 Puts (INTC180111P47)
Sell To Open INTC 11JAN18 50 Puts (INTC180111P50) for a credit of $1.11 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when INTC was trading near $49. 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 $108.50 and your broker would charge a $300 maintenance fee, making your investment $191.50 ($300 – $108.50). If INTC closes at any price above $50 on January 11, both options would expire worthless, and your return on the spread would be 57% (533% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates November 29, 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, Earnings Option Strategy, INTC, 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, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Sunday, November 25th, 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 Post Earnings Dip in Charles River Laboratories (CRL)?
Recent price target upgrades suggest more upside for CRL. Take a look at these two articles that contain the details – Charles River Laboratories PT Raised to $148.00 at Robert W. Baird and Charles River Laboratories Given a $147 Price Target at Royal Bank of Canada.
CRL has been contained within a rising trend channel for just over a year now. A spike higher following their latest earnings report was met with sellers at the top of the channel, resulting in a dip back to roughly the halfway point. Support is found at $125 which was where the stock was trading prior to the earnings inspired gap up. CRL has been outperforming the broader markets as it traded at record highs just a few weeks ago. The trend remains healthy, technically speaking, on a daily chart and higher time frames and there have not been any technical indications that the uptrend won’t continue.
CRL Chart November 2018
*source Tradingview.com
If you agree there’s further upside ahead for CRL, 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 CRL 21Dec18 120 Puts (CRL181221P120)
Sell To Open CRL 21Dec18 125 Puts (CRL181221P125) for a credit of $1.53 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when CRL was trading near $127. 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 $150.50 and your broker would charge a $500 maintenance fee, making your investment $349.50 ($500 – $150.50). If CRL closes at any price above $125 on December 21, both options would expire worthless, and your return on the spread would be 43% (581% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates November 22, 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, CRL, diagonal spreads, Earnings Option Strategy, Monthly Options, Portfolio, Profit, 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 »
Sunday, November 18th, 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
Will Motorola Solutions (MSI) Continue to Outperform?
Investors have many reasons to remain bullish Motorola Solutions including a recent dividend hike as well as an upgrade accompanied with a raised price target. Take a look at the following articles for details – Motorola Rewards Shareholders With 9.6% Dividend Hike and Motorola Solutions Upgraded to Buy by Zacks Investment Research.
The main appeal from a technical perspective is the outperfomance of Motorla stock versus the S&P 500. This was first seen in late October when MSI bottomed very near to its mid-month low. Recent price action appears much more obvious as the equity index turned lower on November 8 while MSI managed to hold near highs. There seems to be a small hurdle near $130, but after several attempts bears have failed to elicit a downturn. This is especially significant considering that equities were broadly weaker during the period this resistance level was being tested. Considering the overall trend and the strength displayed as of late, the odds favor an upside break. The below chart has an overlay of the S&P 500 to illustrate the recent divergence.
MSI Chart November 2018
*source Tradingview.com
If you agree there’s further upside ahead for MSI, 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 MSI 21DEC18 125 Puts (MSI181221P125)
Sell To Open MSI 21DEC18 130 Puts (MSI181221P130) for a credit of $1.84 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when MSI was trading near $130. 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 $181.50 and your broker would charge a $500 maintenance fee, making your investment $318.50 ($500 – $181.50). If MSI closes at any price above $130 on December 21, 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 November 15, 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, Earnings Option Strategy, Monthly Options, MSI, Portfolio, Profit, 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 »
Sunday, November 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.
Terry
Xilinx (XLNX) Surges to Fresh Yearly Highs, What’s Next?
Xilinx has been receiving a lot of media attention as of late, these two articles shed some light on what analysts are expecting from the company – What Makes Xilinx a Strong Momentum Stock: Buy Now? And Has Xilinx Outpaced Other Computer and Technology Stocks This Year?
XLNX reversed sharply higher a few weeks back after their earnings report exceeded expectations. Since then, the stock price regained it’s 20-day moving average, and more importantly, broke to a fresh 18-year high to clearly signal that bulls are in control. A consolidation has taken place over the past week which is common following an important techincal break and most often precedes a continuation in the direction of the trend.
XLNX Chart November 2018
*source Tradingview.com
If you agree there’s further upside ahead for XLNL, 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 XLNL 21DEC18 82.5 Puts (XLNL181221P82.5)
Sell To Open XLNL 21DEC18 85 Puts (XLNL181221P85) for a credit of $1.05 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when XLNL was trading near $86. 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 XLNL closes at any price above $85 on December 21, both options would expire worthless, and your return on the spread would be 69% (681% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates November 8, 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, Earnings Option Strategy, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Weekly Options, XLNX
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, November 4th, 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.
Last week was a great one for the market (SPY up 2.6%) and an even better one for the Terry’s Tips 8 actual option portfolios. Every one made gains, and the composite average picked up 11%, a record we are quite proud of.
Terry
Consider Kirkland Lake Gold (KL), A Gold Mining Growth Stock
The Investor’s Business Daily recently posted an article which started out by stating “Gold might not come to mind first when you think of growth stocks” which is very true. Take a look at this article for the full write up and the reasoning behind why they see growth potential in this stock. Also check out Kirkland Lake Gold Receives Consensus Rating of “Buy” from Analysts.
KL corrected lower ahead of earnings and was mostly flat following it. The technical significance is that the stock managed to hold above a triple confluence of support derived from a rising trendline, the 50-day moving average, as well as a horizontal support level. Also significant is the prior correction that took place in late summer that was held higher by the 200-day moving average. These developments suggests that
bulls remain firmly in control from a technical perspective while the close proximity of the current price to support offers an attractive entry point. It’s worth mentioning that the correlation between this stock and the price of Gold has strengthened since last month and that Gold appears to be carving out a bottom, at least a near-term one.
KL Chart November 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 six weeks, or at least not decline very much.
Buy To Open KL 21DEC18 17.5 Puts (KL181221P17.5)
Sell To Open KL 21DEC18 20 Puts (KL181221P20) for a credit of $0.78 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when KL was trading near $20.00. 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 $75.50 and your broker would charge a $250 maintenance fee, making your investment $174.50 ($250 – $75.50). If KL closes at any price above $20 on December 21, both options would expire worthless, and your return on the spread would be 43% (402% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates November 1, 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, implied volatility, KL, Monthly Options, 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 »
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