from the desk of Dr. Terry F Allen

Skip navigation

Member Login  |  Contact Us  |  Sign Up

802-877-8330

Posts Tagged ‘Monthly Options’

Wedbush Raises Price Target for Microsoft (MSFT) to $270

Monday, February 1st, 2021

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.

Wedbush recently raised their MSFT price target to $270 from $260 and said they see potential for it to reach as high as $300. The following two article discuss the price upgrade and reasons why MSFT appears poised to grow – Microsoft will leap another 20% as cloud-computing strength drives strong earnings, Wedbush says and Microsoft: Still Not Fully Priced, Here’s Why.

Technicals

From a technical perspective, MSFT recently posted a bullish breakout above a horizontal resistance level at $225. This same level had capped rallies three times in the fourth quarter of 2020 and is seen as strong support in the event the stock pulls back further from here. There is also support at $231.15 which marks the late August high.

MSFT Chart February 2021 - Undervalued

MSFT Chart February 2021

If you agree there’s further upside ahead for MSFT, consider this trade which relies on the stock remaining above $230 through the expiration in five weeks.

Buy To Open MSFT 05MAR21 225 Puts (MSFT210305P225)
Sell To Open MSFT 05MAR21 230 Puts (MSFT210305P230) for a credit of $1.73 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when MSFT was trading near $232.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $171.70. This reduces your buying power by $500 and makes your investment $328.30 ($500 – $171.70).  If MSFT closes at any price above $230 on March 5, both options will expire worthless, and your return on the spread would be 52% ($171.70 / $328.30), or 593% annualized.

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

IBD Underlying Updates January 30, 2021

IBD Underlying Updates January 30, 2021

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 Taiwan Semiconductor (TSM)

Monday, January 25th, 2021

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.

TSM’s solid fundamentals and positive technical outlook makes it an attractive stock to buy on dips. Take a look at what the following two articles have to say about the company’s growth prospects – Taiwan Semi Is Betting $28 Billion on Rising Demand for Chips and Taiwan Semiconductor Manufacturing: Our Top Technology Pick For 2021 Is At The Heart Of The Next Wave Of Technology.

Technicals

If you zoom out to a larger timeframe like a weekly or monthly chart, it’s pretty much been a straight line up for TSM. The stock has posted a 47% gain over the last three months and has advanced 124% from a year ago. Dips have been shallow during this time which means the current 5% decline from recent highs could be a buying oppurtunity. Support is in play from the lower line of a rising trend channel that has contained price action since late December. There is also a horizontal level near the bottom of the channel at $128.50 to create a support confluence.

TSM Chart January 2021 - Straight up trend

TSM Chart January 2021

If you agree there’s further upside ahead for TSM, consider this trade which relies on the stock remaining above $129 through the expiration in five weeks.

Buy To Open TSM 26FEB21 126 Puts (TSM210226P126)
Sell To Open TSM 26FEB21 129 Puts (TSM210226P129) for a credit of $1.45 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when TSM was trading near $129.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $143.70. This reduces your buying power by $300 and makes your investment $156.30 ($300 – $143.70).  If TSM closes at any price above $129 on February 26, both options will expire worthless, and your return on the spread would be 92% ($143.70 / $156.30), or 1049% annualized.

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

IBD Underlying Updates January 23, 2021

IBD Underlying Updates January 23, 2021

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

Will Logitech (LOGI) Continue to Post Steady Gains?

Monday, January 18th, 2021

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.

LOGI has rallied 230% from its lows last year and several analysts expect the upward move will continue, here are two of them – Logitech (LOGI) Reports Next Week: Wall Street Expects Earnings Growth and 5 Computer Stocks to Buy That Aren’t Apple or Microsoft.

Technicals

A steady uptrend has been taking place since November. During this time, the stock has been trading within a rising channel and shallow dips have been bought. With LOGI pulling back towards channel support, there could be a good buying oppurtunity around current levels. The 20-Day moving average also comes in to play near the lower bound of the trend channel to create a confluence of support.

LOGI Chart January 2021 - steady gains

LOGI Chart January 2021

If you agree there’s further upside ahead for LOGI, consider this trade which relies on the stock remaining above $100 through the expiration in five weeks.

Buy To Open LOGI 19FEB21 95 Puts (LOGI210219P95)
Sell To Open LOGI 19FEB21 100 Puts (LOGI210219P100) for a credit of $2.08 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when LOGI was trading near $101.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $206.70. This reduces your buying power by $500 and makes your investment $293.30 ($500 – $206.70).  If LOGI closes at any price above $100 on February 19, both options will expire worthless, and your return on the spread would be 70% ($206.70 / $293.30), or 798% annualized.

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

IBD Underlying Updates January 16, 2021

IBD Underlying Updates January 16, 2021

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

Thermo Fisher (TMO) Shows Renewed Upward Momentum

Monday, January 11th, 2021

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.

TMO shows signs it has reverted to an uptrend and with a strong fundamental outlook, the stock could see a continuation higher. The following two articles provide more details on the fundamentals of the company  –  Why the Earnings Surprise Streak Could Continue for Thermo Fisher and Is Thermo Fisher Scientific Inc.’s Latest Stock Performance Being Led By Its Strong Fundamentals?

Technicals

The appeal to TMO from the technical side of things is the resurgence of upward momentum since the start of the new year, TMO has broken higher from a flag pattern that had contained it for most of December and it has rallied above a horizontal level near $482. A small dip can’t be ruled out over the short term but the price action seems to suggest that TMO is ready to resume the prior uptrend with an aim for a new all-time high.

TMO Chart January 2021 - Renewed uptrend

TMO Chart January 2021

If you agree there’s further upside ahead for TMO, consider this trade which relies on the stock remaining above $510 through the expiration in five weeks.

Buy To Open TMO 19FEB21 500 Puts (TMO210219P500)
Sell To Open TMO 19FEB21 510 Puts (TMO210219P510) for a credit of $3.78 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when TMO was trading near $512.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $376.70. This reduces your buying power by $1000 and makes your investment $623.30 ($1000 – $376.70).  If TMO closes at any price above $510 on February 19, both options will expire worthless, and your return on the spread would be 60% ($376.70 / $623.30), or 684% annualized.

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

IBD Underlying Updates January 9, 2021

IBD Underlying Updates January 9, 2021

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

Marvell Tech (MRVL) – An Outperformer Among Its Peers

Monday, January 4th, 2021

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.

MRVL gained 79% last year compared to a smaller rise of 51% in the SOXX Semiconductor ETF. The following two articles discuss why MRVL could continue to see more upside – These 3 Chip Stocks Have Room to Grow, Say Top Analysts and Top-Rated Stocks: Marvell Technology’s Technical Ratings Rise.

Technicals

After a recent break to an all-time high MRVL has been consolidating within a range for two weeks. Strong support is seen to the downside near $45.60 as this level acted as resistance back in November. There is also a rising trendline near the same price point as well as the 20-day moving average. With strong support to the downside, it might only be a matter of time before MRVL makes another run for new highs.

MRVL Chart January 2021 - Rising

MRVL Chart January 2021

If you agree there’s further upside ahead for MRVL, consider this trade which relies on the stock remaining above $47.50 through the expiration in five weeks.

Buy To Open MRVL 5FEB21 45 Puts (MRVL21025P45)
Sell To Open MRVL 5FEB21 47.5 Puts (MRVL21025P47.5) for a credit of $1.00 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when MRVL was trading near $47.50.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $98.70. This reduces your buying power by $250 and makes your investment $151.30 ($250 – $98.70).  If MRVL closes at any price above $47.50 on February 5, both options will expire worthless, and your return on the spread would be 65% ($98.70 / $151.30), or 741% annualized.

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

IBD Underlying Updates January 2, 2021

IBD Underlying Updates January 2, 2021

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

Consider Bristol-Myers (BMY) After a Price Upgrade from Goldman Sachs

Monday, December 28th, 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.

Goldman Sachs recently upgraded BMY to a ‘Conviction Buy’ and assigned a price target of $86. There have been some other recent upgrades which are discussed in this article – Bristol-Myers Squibb (NYSE:BMY) Upgraded to “Conviction-Buy” by The Goldman Sachs Group. Also check out the following article which outlines why investors may see value in BMY at current prices – 3 Cheap Dividend Stocks For High Total Returns.

Technicals

From a technical perspective, BMY has mostly traded in a broad range after a strong rally in the second quarter. The technicals show that the uptrend remains intact and with a confluence of support nearby, this might be a good time to consider an entry. Support for BMY comes from the lower line of a rising trend channel that started in June. The 200-Day moving average falls near the lower channel line to create a strong area of support for the stock.

BMY Chart December 2020 - Conviction Buy

BMY Chart December 2020

If you agree there’s further upside ahead for BMY, consider this trade which relies on the stock remaining above $61 through the expiration in five weeks.

Buy To Open BMY 29JAN21 58 Puts (BMY210129P58)
Sell To Open BMY 29JAN21 61 Puts (BMY210129P61) for a credit of $1.15 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when BMY was trading near $61.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $113.70. This reduces your buying power by $300 and makes your investment $186.30 ($300 – $113.70).  If BMY closes at any price above $61 on January 29, both options will expire worthless, and your return on the spread would be 61% ($113.70 / $186.30), or 696% annualized.

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

IBD Underlying Updates December 26, 2020

IBD Underlying Updates December 26, 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

Advanced Micro Devices Signals More Upside After Breaking to a Record High

Monday, December 21st, 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.

AMD has been in a steady uptrend since the start of November and looks set to continue the trend. Check out what the following two articles have to say about the stock – Buying Stocks for Christmas? Put These Tech Stocks Under the Tree and Jim Cramer: Focus on Single Semiconductor Names, Stay Away from ETF Baskets.

Technicals

From a technical standpoint, AMD has confirmed that it has resumed the uptrend by breaking above the September peak. The stock now shows strong support near the September high, around $94. Further support is found slightly below it from a confluence created by the 20-Day moving average and the lower line of a rising trend channel. In addition to the technical chart, AMD has been steadily outperforming the semiconductor index (SOX) and Intel (INTC) for four years.

AMD Chart December 2020 - record breaking momentum

AMD Chart December 2020

If you agree there’s further upside ahead for AMD, consider this trade which relies on the stock remaining above $96 through the expiration in five weeks.

Buy To Open AMD 22JAN21 93 Puts (AMD210122P93)
Sell To Open AMD 22JAN21 96 Puts (AMD210122P96) for a credit of $1.10 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when AMD 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 be only $1.30 per spread.  Each spread would then yield $108.70. This reduces your buying power by $300 and makes your investment $191.30 ($300 – $108.70).  If AMD closes at any price above $96 on January 22, both options will expire worthless, and your return on the spread would be 57% ($108.70 / $191.30), or 650% annualized.

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

IBD Underlying Updates December 19, 2020

IBD Underlying Updates December 19, 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

Consider Adobe (ADBE) After the Latest Earnings Report

Monday, December 14th, 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.

ADBE has been a regular on the IBD Top 50 list over the past few years and is a favorite among analysts. Check out what the following two reports have to say about it – This Is Adobe’s Must-Hold Support Level if You Buy the Earnings Dip and Adobe (ADBE) Perfectly Positioned for New Highs.

Technicals

Both of the articles linked above discuss a technical outlook for ADBE and for good reason. The stock trades near several moving averages on a daily chart and is also testing support from a rising trendline that originates from a low posted in early November. It’s rare to see such a strong confluence of support lining up in this way and considering the strength this stock has displayed over the years, the odds favor a move to the upside from this point.

ADBE Chart December 2020

ADBE Chart December 2020

If you agree there’s further upside ahead for ADBE, consider this trade which relies on the stock remaining above $475 through the expiration in five weeks.

Buy To Open ADBE 22JAN21 472.5 Puts (ADBE210122P472.5)
Sell To Open ADBE 22JAN21 475 Puts (ADBE210122P475) for a credit of $1.18 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when ADBE was trading near $476.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $116.70. This reduces your buying power by $250 and makes your investment $133.30 ($250 – $116.70).  If ADBE closes at any price above $475 on January 22, both options will expire worthless, and your return on the spread would be 88% ($116.70 / $133.30), or 1004% annualized.

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

IBD Underlying Updates December 12, 2020

IBD Underlying Updates December 12, 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

Pacira BioSciences (PCRX) Dips After Breaking to Multi-Year Highs

Monday, December 7th, 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.

PCRX showed strong upward momentum last month and briefly traded at levels not seen in nearly five years. Several analysts think the stock can continue to gain, the following two articles provide details – IBD 50 Stocks To Watch: This Pharma Stock On 115% Run Eyes Buy Point and $129.57 Million in Sales Expected for Pacira BioSciences, Inc. (NASDAQ:PCRX) This Quarter.

Technicals

The upward move from November has resulted in a bullish candlestick pattern on a monthly chart that suggests dips will be bought over the near-term. The stock has pulled back from its multi-year highs but is seen approaching a strong confluence of support. This comes from an intersection of the 50 and 100-Day moving averages, currently around $58.50.

PCRX Chart December 2020 - Buy the dip

PCRX Chart December 2020

If you agree there’s further upside ahead for PCRX, consider this trade which relies on the stock remaining above the $60 level through the expiration in six weeks.

Buy To Open PCRX 15JAN20 57.5 Puts (PCRX200115P57.5)
Sell To Open PCRX 15JAN20 60 Puts (PCRX200115P60) for a credit of $1.13 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when PCRX was trading near $61.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $111.70. This reduces your buying power by $250 and makes your investment $138.30 ($250 – $111.70).  If PCRX closes at any price above $60 on January 15, both options will expire worthless, and your return on the spread would be 81% ($111.70 / $138.30), or 758% annualized.

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

IBD Underlying Updates December 5, 2020

IBD Underlying Updates December 5, 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

Will Amazon (AMZN) Break Higher Into the Year-End?

Monday, November 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.

AMZN is up 74% in the year thus far and looks poised to continue the uptrend. The following two articles highlight some of the reasons investors may continue to push the stock price higher –  Cramer’s Year-End Game Plan: Load Up On Digital Retailers and Wall Street Analysts Say These 5 Stocks Are A Buy As The World Prepares For The Post-COVID-19 Era.

Technicals

AMZN has been consolidating sideways within a triangle since the start of September. These types of consolidations often end with an upward break when they are preceded by a strong bullish trend. On a monthly chart, the stock is set to print a bullish reversal candlestick pattern which hints that the uptrend might be restarting. Lastly, as mentioned in one of the articles above, seasonality patterns show that AMZN typically performs well in this part of the year.

AMZN Chart November 2020 - Year end upwards break

AMZN Chart November 2020

If you agree there’s further upside ahead for AMZN, consider this trade which relies on the stock remaining above $3195 through the expiry in six weeks.

Buy To Open AMZN 8JAN21 3190 Puts (AMZN210108P3190)
Sell To Open AMZN 8JAN21 3195 Puts (AMZN210108P3195) for a credit of $2.55 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when AMZN was trading near $3195.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $253.70. This reduces your buying power by $500 and makes your investment $246.30 ($500 – $253.70).  If AMZN closes at any price above $3195 on January 8, both options will expire worthless, and your return on the spread would be 103% ($253.70 / $246.30), or 964% annualized.

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

IBD Underlying Updates November 28, 2020

IBD Underlying Updates November 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

Making 36%

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

This book may not improve your golf game, but it might change your financial situation so that you will have more time for the greens and fairways (and sometimes the woods).

Learn why Dr. Allen believes that the 10K Strategy is less risky than owning stocks or mutual funds, and why it is especially appropriate for your IRA.

Order Now

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